Morgan Stanley is removing the cap on bonuses for bankers within the City of London, underlining the trend amongst US and UK banks towards salary packages which are more just like the bonus-heavy packages of their New York colleagues.
The Wall Street bank said in a Applications for approval The current limitation of bonus payments to certain employees to twice their fixed salary will probably be replaced by “an appropriate internal bonus cap”.
The US bank didn’t provide details on how it would adjust salary structures for high-risk employees, only pointing to the necessity for compensation that “provides an appropriate balance between fixed and variable compensation elements”.
Morgan Stanley didn’t immediately reply to a request for comment, but said in an announcement to the Financial Times, which previously reported on the choice, that it could proceed to “pay competitive salaries and reward good performance.”
Banks are apparently introducing numerous latest pay structures. At JPMorgan Chase & Co., bankers could receive a bonus of as much as 10 times their base salary, although the corporate is just not currently planning any significant changes to the fixed salary for British staff. Goldman Sachs Group Inc. plans to chop fixed pay but allow top British traders and dealmakers to receive bonuses of as much as 25 times their base salary, Sky News reported.
The bonus cap was introduced by the European Union in 2014. It limits the payout to so-called “material risk takers” to twice their annual salary. The aim of this measure was to curb excessive risk-taking within the banking sector after the 2008 financial crisis.
When the British authorities lifted the cap last 12 months, it was a part of a broader initiative to make Britain a more attractive financial centre after Brexit.
