JPMorgan Chase & Co., together with its rival Goldman Sachs Group Inc., has lifted the cap on bonuses for London bankers, paving the best way for the corporate’s top employees to potentially earn even higher salaries.
The move will allow JPMorgan bankers to receive a bonus of as much as 10 times their base salary, an individual conversant in the matter said. That’s a rise from the present cap, which limits certain staff’s bonuses to twice their base salary. It comes after the UK government raised the long-standing cap on bankers’ bonuses last yr.
“We believe we have developed one of the most attractive and balanced compensation structures in the industry,” a JPMorgan spokesperson said in an announcement. “Fixed compensation will continue to be highly competitive and we will have sufficient flexibility to appropriately reward the best employees.”
JPMorgan’s move, first reported by Sky News, is the newest sign that London’s financial industry has begun restructuring bonuses for a lot of top traders and investment bankers, a move that might soon mean their paychecks more closely resemble the bonus-heavy packages of their New York counterparts.
Banks have warned that adapting to a world without bonus caps will pose challenges, as many financial firms have already overhauled their compensation structures and paid their bankers higher fixed salaries to reflect the cap.
JPMorgan is just not currently planning any significant changes to the fixed salary of its UK staff, said the person conversant in the matter, who asked to not be identified. The bank’s employees prefer this structure since it gives them more stability in managing their monthly expenses, the person said.
The is different of the plans of Goldman executives who, in keeping with Sky News, warned bankers last month that the abolition of the EU-era bonus cap would result in lower fixed salaries. But the New York-based bank is now allowing its top British traders and dealmakers to earn bonuses of as much as 25 times their base salary, the report said.
The bonus cap was introduced by the European Union in 2014 and limited the bonuses of individuals taking so-called material risks to twice their annual salary. The aim was to curb excessive risk-taking within the banking sector after the 2008 financial crisis.
When British authorities lifted the salary cap last yr, it was a part of a broader initiative to make Britain a more attractive financial centre after Brexit. Bloomberg first reported in April that JPMorgan and Goldman Sachs were reviewing their pay policies for his or her London staff after the federal government scrapped the cap.
