Wall Street giant Citigroup has reportedly become the latest US bank to remove an EU-imposed bonus cap for hundreds of its top London staff, following in the footsteps of its biggest rivals.
It is unclear how much Citi’s leading investment bankers will now be able to earn relative to their base salary. The Sunday Times reported the news.
City A.M. approached Citi for comment.
The reported move comes after Barclays told staff last week that its so-called material risk-takers (MRTs) would be able to earn a bonus worth up to 10 times their base salary, up from a current ratio of 2:1.
JPMorgan Chase and Goldman Sachs have also ditched their existing limits in recent months, with top staff at the latter now eligible to earn up to 25 times their annual salary. Morgan Stanley is planning to set a new cap as well but has not revealed further details on its approach.
UK financial regulators announced last October they would remove the requirement for banks to cap variable pay at 100 per cent of base salary for MRTs, or up to 200 per cent with shareholder approval.
The cap was introduced in 2014 by the EU as part of efforts to limit excessive risk-taking following the financial crisis.
Big banks responded to the EU’s limit with so-called role-based allowances – de facto bonuses that gave MRTs a higher proportion of fixed pay.
UK regulators grew concerned that this change could make it more difficult for banks to rein in costs during periods of weaker financial performance.
Banks still face other measures to ensure their pay policies do not reward risk-taking, including the Financial Conduct Authority’s remuneration code.