They don't "ignore" anything. The market is what's relevant to them . SWE salaries and not banking salaries. SWE salaries in finance would be even worse in London.

And that's why they have such great retention in London, and nobody ever moves to the US for better money?

I mean, they normally aim to pay 90th percentile for the market, and that is definitely not true for London.

This is very efficient and is calibrated every year. It makes no sense to account for salaries in fields that don't compete. If someone wants to be paid higher they could happily move to the US. The algorithm accounts for all of this.

I'm glad you think so. Having worked with a megacorp that took this approach, the primary reason I'm not still with them is that all the decent jobs in tech were in London, and moving there would have required me to take a relative paycut (the wages were the same but the CoL was much higher).

However, I did get a lot of offers at much less profitable companies for much, much better salaries based in London, hence why I'm pointing out this problem.

I mean, if you're fine with only hiring grads/relatively junior developers then the system works. I'm just observing that it didn't work for me, and for a lot of people I knew back it the days.

(The constant re-staffing of teams with new people after key members moved to the US was also maddening).