What's happened
UK banks, including HSBC and Goldman Sachs, are removing EU-imposed bonus caps for UK-based workers, allowing for higher variable pay based on performance. The move aims to reduce fixed costs, attract talent, and align with global financial centers.
Why it matters
The removal of bonus caps by UK banks signifies a shift towards rewarding performance and attracting talent. It aligns the UK with other major financial centers, potentially impacting the competitiveness of London as a financial hub. The move could have implications for the banking sector's compensation practices and talent retention strategies.
What the papers say
Sky News and The Independent report on HSBC shareholders approving the removal of bonus caps, highlighting the bank's focus on rewarding staff based on performance. BBC News and The Guardian cover Goldman Sachs becoming the first to remove bonus caps, emphasizing the move's alignment with global financial centers and the potential impact on staff pay and performance.
How we got here
The EU had imposed bonus caps in 2014 to deter excessive risk-taking by bankers, following the 2008 financial crisis. UK regulators changed the rules in 2023, allowing banks to scrap the caps. The removal of bonus caps by HSBC and Goldman Sachs reflects a broader trend in the UK banking sector to align with international practices and attract top talent.
Common question
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northÂwestern coast of the European mainland.
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The Goldman Sachs Group, Inc., is an American multinational investment bank and financial services company headquartered in New York City.