Wall Street’s largest investment bank Jp Morganeliminates cap on bonuses For bankers imposed by Brussels Londonpaving the way for earning up to 10 times their current salary.
The news comes just weeks after rival Goldman Sachs also launched the era After Brexit for salaries in the banking sector.
AM. limit on bankers’ bonuses
It was the European Union that set UK bankers’ bonuses in 2014 to this end. First, led by the government Rishi Sunak It has announced that it will cancel a European regulation pending since 2014, which sets a maximum bonus for managers and employees of banks and investment companies at twice their annual salary. Essentially, the measure limited bonuses to double base salary if approved by shareholders. However, banks have often had to raise fixed wages to get around the limit.
JpMorgan today joined rival Goldman Sachs in lifting the cap on variable compensation components for London-based human resources. JP Morgan, which employs 22,000 people in the UK, including around 14,000 in London, has decided to retain a significant proportion of the fixed salary allowances used to calculate the maximum bonuses for eligible employees.
The American banking giant has also decided to raise the maximum bonus ceiling from twice the fixed salary to ten. This means that a senior UK JP Morgan banker or trader on a fixed annual salary of £2m will receive up to £20m in bonuses from this year, up from the expected £4m under EU standards; Responding to a comment request Sky NewsA spokesperson for JP Morgan said:
“We believe we have developed one of the most attractive and balanced compensation structures in the industry. Fixed pay will remain very competitive and we will have plenty of scope to reward top performers adequately.”
What did Goldman Sachs decide?
It was last month Goldman Sachs chose to eliminate the cap, a move that helps the bank change the way it compensates its “material risk takers,” a class of employees whose work can have a big impact on the bank. Goldman’s new structure includes the elimination of fixed compensation bonuses, meaning bonuses will always be calculated from a lower base than JP Morgan.
Either way, the move by Wall Street’s two biggest investment banks to recalibrate how they approach pay for their top UK-based staff will spark an arms race between rivals to stay competitive, making them more attractive to both working bankers. for competitors and those outside national borders.