JPMorgan and Citigroup consider fixed pay cuts for senior UK executives
JPMorgan Chase and Citigroup are mulling reductions to fixed pay for their senior executives in the UK, reported Bloomberg citing sources.
This follows the recent modifications to local remuneration regulations.
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JPMorgan is expected to reach a decision in the coming weeks on whether to cut or entirely remove fixed allowances for employees deemed “material risk takers,” a category that includes senior traders, investment bankers, and compliance executives, according to a person privy to the development.
Citigroup is also assessing similar changes, sources said.
The reviews are in response to adjustments made by UK regulators.
In October, authorities changed rules on banker compensation by easing bonus deferral requirements and reducing the time executives must wait before receiving discretionary pay from eight years to four.
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThese modifications have decreased the need for fixed allowances that had previously formed a larger portion of pay packages.
JPMorgan reported around 600 material risk takers in the UK at the end of 2024; Citigroup had at least 500 based on regulatory filings. Both banks declined to comment on the potential changes.
One person familiar with JPMorgan’s review stated that the aim is to align UK pay structures more closely with global standards, emphasising merit-based compensation.
The overall level of remuneration may remain unchanged for most individuals; only its composition would be altered.
According to an internal memo circulated in December and seen by Bloomberg News, “is expected to result in a significant reduction or removal of UK fixed allowances for most employees.”
Regulatory reforms have prompted several major banks operating in London to change their remuneration policies since a government decision last year lifted a cap on bonuses.
That cap, introduced by the European Union in 2014, had limited bonuses to twice an employee’s base salary.
Goldman Sachs Group confirmed in 2024 that it was lowering fixed allowances for its approximately 630 material risk takers after bonus restrictions were removed.
The firm did not provide further comment.
In 2024, HSBC Holdings has ended fixed-pay allowances for its executive directors and plans to outline remuneration arrangements in its upcoming annual report.
According to sources familiar with Citigroup’s approach, new rules allow more flexibility in structuring executive pay while maintaining competitiveness within the firm’s global framework.
The same regulatory changes also motivated JPMorgan’s review of its fixed allowances.
Representatives from Bank of America, Barclays, and Morgan Stanley refused to comment on their pay structures, added Bloomberg.
When approached by Retail Banker International, JPMorgan and Citigroup declined to provide comments.
BNP Paribas, headquartered in France, stated it will not be making any changes to its allowance policy.
For 2025, it is understood that a larger share of compensation at JPMorgan will be made available as cash and immediately-vested stock should fixed allowances be scaled back. Employees are not expected to lose access to cash under this possible adjustment.
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