City bonuses beat Wall Street after cap scrapped
UK financial services handed out the industry’s highest bonuses last year after taking advantage of the lifting of pay restrictions.
Workers pocketed an average $149k (£114k) bonus in 2024, according to fresh data from jobs platform eFinancialCareers.
This marked a 25.7 per cent jump from 2023 and sent the UK above North America, which rose 17.6 per cent.
Bankers on Wall Street booked an average bonus of $145.8k.
Bonuses in Europe grew 18.6 per cent but still trailed behind the UK and North America at $108.5k.
The survey included 2,500 industry employees from major lenders JPMorgan, Goldman Sachs and Barclays.
UK banks hiked bosses’ payouts after ditching bonus cap
Top bosses at British banks received a pay boost after the UK government scrapped EU bonus cap rules in 2023.
The cap was introduced in 2013 through the Capital Requirements Directive IV – a part of the EU’s regulatory framework on international banking standards.
It restricted bonuses to 100 per cent of a fixed salary or to 200 per cent in the event of shareholder approval. The move was intended to disincentivise high-risk decisionmaking by senior bankers in the wake of the financial crash.
It applied to “material risk takers,” which were those deemed to significantly impact an institutions’ risk profile, such as top executives or traders. The rules were enforced by the European Banking Authority, which had been based in Canary Wharf before relocating after Brexit.
Whilst the remaining EU states are forced to maintain the cap, post-Brexit Britain ditched the cap under Kwasi Kwarteng’s brief Chancellorship in a bid to lure senior bankers back to London.
The move, which had courted controversy, was one of the few introduced in Kwarteng’s so-called ‘mini-budget’ which did not get overturned by successive chancellors.
Goldman Sachs was the first lender to kick off the revamp to industry pay in London, with JPMorgan and Barclays following suit.
Lloyds Bank said in its annual report chief executive Charlie Nunn would take home a total of £5.6m for 2024 – a 53 per cent jump on 2023.
Other FTSE 100 lenders are set to put their upgraded pay packages to a shareholder vote at upcoming AGMs.
Natwest will propose a 43 per cent boost to chief executive Paul Thwaite’s pay package, which could see the boss earning up to £7.7m.
Barclays’ CS Venkatakrishnan could be in line for a £14.3m payout, a 45 per cent jump, with shareholders approval.
HSBC is proposing a 43 per cent increase to £15m for boss Georges Elhedery’s maximum pay.