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Inferring the new salaries and bonuses for JPMorgan and Goldman MDs in London

Now that we know for sure that JPMorgan and Goldman Sachs are jettisoning the EU bonus cap and so inflating London bonuses and reducing salaries with varying degrees of enthusiasm, we can make some informed assumptions about what happens next to pay for their most senior staff. 

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The bonus cap, which restricted bonuses to no more than twice salaries only applied to material risk takers (MRTs). We know what Goldman and JPMorgan paid MRTs in the past because banks were obliged to divulge the average salaries and average bonuses for their MRTs under European regulations.  

Not everyone is an MRT: the term only applies to people who are in a position to take significant risks with a firm’s capital, or to prevent those risks from being taken. At J.P. Morgan Securities, which covers JPMorgan’s corporate and investment bank in the UK, there were 587 "identified staff" (MRTs)  in 2023; at Goldman Sachs Group UK, Goldman’s UK-based entity, there were 569 MRTs in 2022 (the last year for which figures are available). Both are a tiny swathe of the total. - JPMorgan Securities employed 2,159 people; Goldman employed 3,800.

When we talk about pay for material risk-takers, we're therefore only referring to a slice of people at the top - most of whom will be managing directors (MDs).

Under the old bonus cap system, the people in these slices received salaries and fixed allowances that were higher than bonuses. 

For example, J.P. Morgan Securities paid its 587 London MRTs an average of $1.6m in combined salary and bonus in 2023. Of that $1.6m, $877k was salary (and fixed allowances) and 'just' $754k was bonus. 

Goldman Sachs International paid its 569 MRTs total compensation averaging $1.4m in 2022, comprised of an average salary + allowance of $847k and an average bonus of $635k. 

Now that the UK has liberated itself from the EU's bonus edicts, times are changing. 

JPMorgan declined to comment for this article. However, it's understood that JPMorgan now intends to pay bonuses of up to 10 times MRT salaries in London, while keeping fixed pay (salaries and allowances) the same for most people. If salaries remain $874k, the implication is that top performers at the bank in London could in the future receive bonuses of...........$8.74m. This is unlikely to apply to many people: in its last regulatory filing, JPMorgan revealed that 14 people in the UK earned over $6.4m last year. 

What about Goldman Sachs? In its unfettered post-bonus cap existence, Goldman plans to pay bonuses that are up to 25 times higher than its London salaries. If London salaries stay the same, this implies that Goldman will be paying individual bonuses of....$21m in London. This is not inconceivable: ten people there earned over $11m in 2022. However, Goldman has also indicated that it's trimming salaries in the new pay reality, so this could be wishful thinking. If Goldman's London salaries are cut to match the New York average of $400k and bonuses are 25x salaries, then London bonuses will instead be a maximum of $10m in the future. It's not $21m, but hey. Goldman Sachs also declined to comment.

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AUTHORSarah Butcher Global Editor

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