Payouts for top bankers in the UK have surged following the removal of the European Union's bonus cap, according to a new report. The cap, which limited bonuses to twice an employee's fixed pay, was scrapped by the UK government in October 2023 as part of post-Brexit financial reforms.
Sharp Increase in Total Compensation
Data from regulatory filings show that the average total compensation for senior bankers at major UK lenders rose by 15% in 2024 compared to the previous year. The increase was driven primarily by higher variable pay, with bonuses accounting for a larger share of total remuneration.
Impact on Top Earners
For the highest-paid executives, the changes were even more pronounced. Some top earners saw their total compensation double, as banks moved to restore performance-linked pay to pre-crisis levels. The removal of the cap allows banks to offer more competitive packages to retain talent in a global market.
Industry Reactions
The move has drawn mixed reactions. Proponents argue that it will help London maintain its status as a global financial hub, while critics warn of increased risk-taking and inequality. The Bank of England has said it will monitor the impact on financial stability.
Overall, the shift marks a significant change in UK banking compensation practices, with potential implications for the wider economy.
