Goldman Sachs is the first mover in terms of removing the cap on banker bonuses. Back in 2014, bonuses were limited to twice basic pay. But according to Goldman Sachs, the relaxation in the law announced last year will give it ‘greater flexibility’. And enable the UK arm of the bank to get closer to bonus levels in New York and elsewhere.
Other major banks are now likely to follow Goldman Sachs’ lead.
Go deeper with GlobalData
Pete Healey, CEO at eFinancialCareers, said: “It’s inconceivable that Goldman Sachs will hold onto its first mover advantage for long as other banks exploit the freedom and flexibility to restructure remuneration without the limitation of the bonus cap.
“Our global research shows Goldman staff are already among the most satisfied in the banking sector with their pay. Although with one in three (36%) feeling this way, there’s clearly room for improvement. At the same time, the UK bonus cap was lifted in controversial circumstances and it may prove harder to change in practice than many people assume.
“Banks will want to keep some pay stability, which may mean rising bonuses are accompanied by falling salaries and less overall income certainty. Any changes that require new contracts to be signed could become a battle for consent, which some bankers may refuse to give.
‘No denying the UK has a pay problem’
“Nonetheless, there’s no denying the UK has a pay problem when judged through the eyes of the banking sector. This makes recruitment and retention an ongoing challenge. More than half of UK bankers feel they are unfairly paid. This risks putting London at the back of the queue in the competition for talent and adds to the sense of faded glory surrounding the City.
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By GlobalData“Europe clearly has an edge over the UK on pay appeal with more bankers in the ‘happy’ camp and fewer feeling their efforts are unfairly rewarded. However, bonuses are only one lever which British banks can pull to rebalance the equation.”
Bankers’ views on whether they are fairly paid
| Yes | Unsure | No | |
| APAC | 26% | 32% | 42% |
| Europe | 34% | 20% | 46% |
| United Kingdom | 30% | 19% | 51% |
| USA | 24% | 29% | 47% |
Source: eFinancialCareers, 2024 Compensation Report
