JPMorgan follows Goldman Sachs in scrapping EU bonus cap for London staff
Wall Street giant JPMorgan Chase has become the latest bank to scrap an EU-imposed cap on its UK staff’s bonuses, after rival Goldman Sachs made the same move last month.
JPMorgan’s London-based bankers will now be able to earn payouts equivalent to as much as 10 times their base salary, a person familiar with the matter told City A.M. This ratio is up from 2:1 under the EU-imposed cap.
The person added that the bank did not expect staffers’ fixed pay to materially change under the new structure this year compared to 2023.
They said that broadly maintaining fixed pay levels provided more stability for staff to manage regular family expenses each month, such as mortgage payments.
A JPMorgan spokesperson commented: “We believe we have developed one of the most attractive and balanced pay structures in the industry. Fixed pay will remain very competitive, and we will have ample room to reward the highest performers appropriately.”
JPMorgan, which is the world’s biggest bank by market capitalisation, employs roughly 22,000 people in the UK, including around 14,000 in London.
The changes come eight months after UK financial regulators announced they would remove the requirement for banks to cap variable pay at 100 per cent of base salary for so-called “material risk-takers”, or up to 200 per cent with shareholder approval.
Shareholders of HSBC and Barclays last month approved proposals to set new bonus caps. Goldman fired the starting gun at the beginning of May by confirming that top performers at its 6,000-strong London office would be able to earn up to 25 times their annual salary.
The cap was introduced in 2014 by the EU as part of efforts to limit excessive risk-taking following the 2008 financial crisis.
Banks still face other measures to ensure their pay policies do not reward risk-taking, including the Financial Conduct Authority’s remuneration code.
The changes at JPMorgan were first reported by Sky News.