Almost sixteen years after the Lehman crash, the large US investment banks they retraced their steps, doing skip the cap on bonuses established following the outbreak of the 2008 financial crisis. A ceiling that appeared necessary in an era in which the bankers – responsible for triggering the crisis – received stellar salaries.
JP Morgan follows Goldman Sachs’ lead
Following the example of rival Goldman Sachs, too JP Morgan has blown the cap on bonuses of London bankers and brokers, that is, the ceiling on that variable component of the salary, which is paid on the basis of the results obtained by the employees of the offices based in London.
And so, JP Morgan announced its top traders and bankers they will be able to perceive up to 10 times the basic salary, while today the limit was set twice the basic salary. A decision made after that Goldman Sachs raised the variable premium up to 25 times the basic salary, giving a very strong signal of a reversal of trend, after that announced by the British government.
Last year, the UK government he had blown the roof off bankers’ bonuses, though make UK markets more competitive post-Brexit. Double the basic salary was the limit imposed by the EU on risk-taking employees since 2014.
Bonuses and base salaries
Ever since the cap on bankers’ bonuses was established, the large investment banks, in an attempt to secure the best bankers and traders, have placed themselves in competitionalso raising the basic salaries of their employees.
An adjustment that is more than ever appreciated by bankers and, certainly, preferred to bonuses, because the increase in the basic salary offers greater stability of remuneration flows over time, compared to a remuneration component that is variable in nature.
For the moment JP Morgan has not announced any increase in base pay, but only an increase in the variable bonuses paid on work performance. “We believe we have developed one of the most attractive and balanced compensation structures in the industry,” a JP Morgan spokesperson told Sky News, adding “fixed pay will remain very competitive and we will have ample scope to reward performers appropriately.”
How much does a City trader earn?
A senior banker or trader at JP Morgan, operating in the London offices, who receives, for example, a fixed salary of 2 million of pounds, he could get to perceive 20 million pounds in bonus. against the £2 million currently paid with the bonus cap.
