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JPMorgan Chase & Co. joined rival Goldman Sachs Group Inc. in scrapping a cap on London bankers\u2019 bonuses, paving the way for the firm\u2019s top staffers to potentially earn even fatter paychecks.\u00a0<\/p>\n
The move will allow JPMorgan\u2019s bankers to earn a bonus that\u2019s as much as 10 times their base salary, according to a person familiar with the matter. That\u2019s up from a current limit that restricts certain employees\u2019 bonuses to two times their fixed pay and comes after the UK government last year lifted its longtime cap on bankers\u2019 bonuses.\u00a0<\/p>\n
\u201cWe believe we have developed one of the most attractive and balanced pay structures in the industry,\u201d a JPMorgan spokesman said in a statement. \u201cFixed pay will remain very competitive, and we will have ample room to reward the highest performers appropriately.\u201d<\/p>\n
JPMorgan\u2019s move, which was first reported by Sky News, is the latest sign that London\u2019s finance industry has begun the process of rejiggering bonuses for legions of top traders and investment bankers, moves that could soon mean they\u2019ll have paychecks that look more like the bonus-heavy packages of their New York counterparts.<\/p>\n
Banks\u00a0have warned<\/a>\u00a0that there will be challenges in adapting to a world without the bonus cap because many financial firms had already upended their compensation structures and handed their bankers higher fixed salaries to accommodate the limit.\u00a0<\/p>\n For now, JPMorgan isn\u2019t planning to materially change UK staffers\u2019 fixed pay, the person familiar with the matter said, who asked not to be named discussing personnel matters. Employees at the bank prefer that structure because it gives them more stability to manage their monthly expenses, the person said.\u00a0<\/p>\n That\u00a0differs<\/a>\u00a0from executives\u2019 plans at Goldman, which warned bankers last month that ditching the EU-era cap on bonuses would mean lower fixed pay, according to Sky News. But the New York-based bank is now allowing its top UK traders and dealmakers to earn bonuses that are as much as 25 times their base salary, the report said.<\/p>\n The bonus cap was introduced by the European Union in 2014 and limited the bonuses of so-called material risk takers to twice their annual salary. It was intended to curb excessive risk-taking in the banking sector after the 2008 financial crisis.<\/p>\n When UK officials abandoned the cap last year, it was part of a broader push to make post-Brexit Britain more attractive as a financial center. Bloomberg first reported in April that JPMorgan and Goldman Sachs were reviewing their pay policies for their London staffers as a result of the government ditching the limit.<\/p>\n<\/div>\nSubscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free<\/a> before it launches on June 24, 2024.<\/div>\n<\/div>\n