Goldman Sachs to scrap cap on bonuses for hundreds of UK staff

Goldman Sachs has told hundreds of its top UK bankers that it is eradicating a cap on bonuses, in a move that will allow its star performers to earn up to 25 times their annual salary.

Richard Gnodde, chief executive of Goldman Sachs International, made the announcement during a video message to staff on Thursday. It comes months after UK regulators confirmed they were formally scrapping EU rules that previously limited bonuses to twice an individual’s base salary. UK lenders including HSBC, Barclays and NatWest are planning to follow suit.

Gnodde said in the video that ending the UK cap would help level the playing field across its international workforce. “We are a global firm and to the extent possible we adopt a consistent global approach across everything we do. The bonus cap rules were an important factor preventing us from being consistent in the area of compensation.”

He said Goldman had advocated for changes that would give banks the flexibility of weighting payouts more heavily towards bonuses rather than fixed salaries. The move gives lenders more control over staff pay, depending on performance. It will also be easier to defer pay, and potentially claw back bonuses from bankers when things go wrong.

The changes will apply to hundreds of Goldman’s 6,000 UK staff – known as material risk takers – who will now be able to earn up to 25 times their salaries in bonuses.

Source: Theguardian