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Barclays has become the first bank to lift a cap on bankers' bonuses originally imposed by the EU, allowing employees to earn up to 10 times their salary.
In a memo sent to staff on Thursday, the bank said the new bonus cap “should not change colleagues’ expectations around total compensation,” which will not automatically increase.
Last year, financial regulators decided to scrap the cap limiting how much bankers could take home in annual payouts. The post-Brexit decision meant UK banks no longer had to follow EU rules.
The EU policy was originally imposed to discourage excessive risk-taking, which was blamed for the 2008 financial crisis and subsequent global economic crisis.
The move brings Barclays in line with policy set by investment bank JP Morgan amid efforts to woo top bankers.
In May, HSBC shareholders approved the removal of a cap on bankers’ bonuses. The bank said the removal of the cap would give it more flexibility to reduce fixed pay levels and instead focus more on rewarding staff based on performance over time.
He also said it would help attract and retain talented people from international markets outside the EU, where there is no cap on variable pay.
Former Prime Minister Liz Truss and Chancellor Kwasi Kwarteng made the decision to scrap the cap on bankers' bonuses in 2022 in a bid to encourage more investment in the UK and boost economic growth.
Before her election victory, Chancellor Rachel Reeves confirmed that Labour had no intention of imposing a cap on bankers' bonuses, prompting criticism from some quarters of the party including former leader Jeremy Corbyn.
Barclays expects around 1,600 employees globally to be affected by the change, known as its “material risk takers.”
These staff members will be able to earn up to ten times their fixed salary in variable remuneration, which includes bonuses. Previously, the limit was set at twice the level of the fixed salary.
The bank said the change would give it more flexibility in setting individual bonuses within a small group of staff and make it a more competitive place to work.
A Barclays spokesman said: “The revised bonus cap will not alter the way Barclays sets its incentive fund, which is based on overall group performance.
“It will allow us greater flexibility to differentiate individual bonuses within a small, defined group of colleagues, enabling Barclays to continue to compete effectively to retain and attract top talent globally.”
Employees affected by the change will not see their salaries reduced as a result.
Workers who take material risks within the EU, including Ireland, will continue to have bonuses limited to twice their salary.
