Barclays has become the first British bank to tell staff a bonus cap is being scrapped in a post-Brexit victory.
In a boost for the country’s financial services industry, the City giant has ditched previous rules which were introduced by Brussels in 2014 that limited bonuses to two times an employee’s annual salary.
The idea was to put a brake on risky behaviour by traders and bankers in the wake of the 2007-09 financial crisis and to avoid a repeat of that meltdown.
Bonus bonanza: Barclays, led by boss Venkat (pictured) has become the first British bank to ditch EU rules that limited bonuses to two times an employee’s annual salary
But top Barclays bankers have been told their bonuses will be set up to as much as ten times their fixed pay in a major Brexit benefit for the Square Mile.
Around 1,600 employees, mainly based in Britain and the United States, will benefit – including those in Barclays’ lucrative investment banking division.
Executives at the bank – run by CS Venkatakrishnan (known as Venkat) – which employs around 9,000 in the UK, believe the move will help retain and lure top talent.
The announcement follows similar overhauls by Wall Street banks JP Morgan and Goldman Sachs.
Barclays said this move would ‘allow us greater flexibility to differentiate individual bonuses within a small and defined group of colleagues’.
And a spokesman added the bank will be able to ‘continue to compete effectively to retain and attract the best talent globally’.
But the update does not apply to bankers in Ireland or Monaco as they are still subject to EU rules.
The Conservatives lifted its long-time cap on bankers’ bonuses last year as part of a post-Brexit shake-up of City rules.
But until now, only big American banks with significant operations in the UK had said that they were increasing potential bonuses for their top dealmakers and traders in Britain.
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In May, Goldman Sachs revealed its senior staff based in Britain would be able to earn bonuses worth up to 25 times their fixed pay.
The following month JP Morgan raised its limit to ten times.
Critics have argued that the bonus cap made it more difficult to lure top talent into London, with bankers flocking to New York, Singapore or Zurich instead.
Former chancellor George Osborne failed to overturn what he described as ‘badly designed rules’ at the European court of justice in 2014. Bank of England governor Andrew Bailey has previously described the cap as ‘misguided’ and ‘the wrong policy’.
Former chancellor Kwasi Kwarteng also proposed scrapping the banker bonus cap during Liz Truss government’s mini-Budget in September 2022.
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