- With the UK’s EU bonus cap gone, London banks can pay MRT bonuses far above base pay (e.g., Goldman up to ~25×, JPMorgan ~10×).
- Years of capped bonuses inflated fixed pay, leaving senior MRT base salaries averaging about £524,000 in 2024 and creating legacy pay distortions.
- Citi shows the split: long-tenured MDs keep high base with limited bonus upside, while newer MDs take lower base with much higher discretionary bonus multiples.
- More bonus-heavy pay cuts banks’ fixed costs but raises pay inequality, morale and retention risks, and sharper scrutiny of deferral and clawback rules.
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The abolition of the EU-era bonus cap in the UK has triggered a sharp restructuring of compensation for senior London bankers. Previously limited to bonuses no greater than twice base salary, MRTs at institutions like Goldman Sachs and JPMorgan now operate under discretionary caps—Goldman allowing up to ~25× base pay, JPMorgan up to ~10×.
This change has exposed legacy structural distortions. Banks had countered the old cap by inflating base salaries and introducing allowances and role-based pay to maintain total compensation. For example, by 2024, the average salary for senior MRTs at Goldman, Morgan Stanley, Citi, JPMorgan, and Bank of America had surged to £524,000—roughly double pre-cap levels.
At Citi particularly, insiders report a bifurcation: long-standing MDs on inflated base pay with low potential for bonus; newer MDs with much lower base but higher upside via large bonuses—up to ~6× base. Historic employees might receive little to no bonus depending on the pool and performance criteria.
The strategic imperatives from these shifts include:
- Liquidity risk management: Banks reduce fixed cost commitments but increase variable pay exposure; this allows greater cost flexibility in weaker years.
- Talent competition: Firms that aggressively reduce base salaries may attract high performers willing to risk variability; but many executives prioritize certainty in pay.
- Internal equity: Disparities between legacy and newer MRTs may create tension and attrition risks among those who chose stability over risk.
- Regulatory optics and investor expectations: With higher bonuses, especially variable ones, banks will face increased scrutiny around risk-taking, deferral, and clawback arrangements.
Open questions remain: What true net impact will be on total compensation levels? Will legacy salaries be rolled back, wholly replaced, or retained with symbolic bonuses? How will firms balance bonus deferral, cash versus equity mix, and performance calibration under higher bonus potential?
Supporting Notes
- The UK removed the EU bonus cap, which had limited bonuses to no more than 2× base salary for MRTs; banks like Goldman Sachs are now allowing bonuses up to 25× base.
- JPMorgan has revised its structure to allow bonuses of ~10× fixed pay for London staff, while keeping fixed pay unchanged.
- The average salary for senior MRTs across Goldman Sachs, Morgan Stanley, Citi, JPMorgan, and Bank of America reached approximately £524,000 in 2024—nearly double what it was before the cap.
- Citi’s new managing directors are being paid salaries rebased lower, with bonus multipliers up to ~6×, whereas longtime MDs retain high salaries and are likely to see small bonuses this year.
- With allowances (which counted as fixed pay under the cap) being reduced or reclassified—Goldman Sachs is said to have halved allowances as of July 1, 2024, shifting toward lower fixed pay and more bonus-based structure.