Morgan Stanley joins JPMorgan and Goldman Sachs in removing bonus caps for UK banks
Morgan Stanley is putting a break on City of London bankers’ bonuses, underscoring a shift between US and UK lenders in pay that looks like hefty bonus packages for their New York counterparts.
The Wall Street bank said in a regulatory filing that it is replacing the current limit that limits certain employees’ bonuses to twice their fixed salary with an “appropriate internal bonus cap.”
Bank of America did not specify how it would adjust pay structures for material risk takers beyond noting the need for compensation that is “fairly balanced between the elements of fixed and variable compensation.”
Morgan Stanley, which did not immediately respond to a request for comment, said it continues to “pay competitively and reward strong performance” in a statement to the Financial Times, which previously reported the decision.
Banks are understood to be using a range of new payment structures. At JPMorgan Chase & Co., bankers can receive a bonus equal to 10 times their base salary although the company does not currently plan to change the fixed salary for UK employees. Goldman Sachs Group Inc. plans to reduce fixed pay while allowing the UK’s top traders and salespeople to earn bonuses of up to 25 times their basic salary, Sky News reports.
The bonus limit was introduced by the European Union in 2014, limiting the payment to those who call themselves material risk takers to double their annual salary. The move was aimed at curbing excessive risk in the banking sector after the 2008 financial crisis.
When UK officials abandoned the cap last year, it was part of a wider campaign to make post-Brexit Britain more attractive as a financial centre.
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