Home » UK Employment news » Goldman Sachs First To Remove Cap On Banker Bonuses
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Goldman Sachs has removed the cap on bankers' bonuses, making it the first major bank to do so following changes in UK regulations last year.
The bank believes the move offers "greater flexibility."
Bosses also say it aligns more closely with practices in other major financial centers like Singapore and New York.
Bonuses were capped at twice the basic salary, a restriction put in place by the EU in 2014.
This policy aimed to curb the excessive risk-taking seen during the 2008 financial crisis.
However, it was met with resistance from the UK.
It has been criticized for leading to higher base salaries, which are more difficult to reduce or reclaim in cases of poor performance or misconduct.
The Financial Conduct Authority said removing the cap should address these "unintended consequences."
Former Chancellor Kwasi Kwarteng announced the regulatory change in 2022, aiming to enhance London's competitiveness as a financial hub.
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The cap has been viewed as a barrier to attracting talent from the US and Asia, according to some banks.
Goldman Sachs said: "This approach gives us greater flexibility to manage fixed costs through the cycle and pay for performance.
"It brings the UK closer to the practice in other global financial centers, to support the UK as an attractive venue for talent."
Several other banks are reportedly reassessing their compensation strategies in response to this development.
However, the removal of the bonus cap has faced criticism.
Paul Nowak, general secretary of the Trades Union Congress, last year branded it an "insult to working people," highlighting the financial struggles faced by many across the country.
Not all bankers favor the change; some prefer a higher guaranteed basic salary over performance-dependent bonuses.
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