JP Morgan has scrapped an EU bonus cap for bankers in London, clearing the way for them to earn 10 times their salary.
In a boost for the City, the Wall Street giant has overhauled rules limiting bankers to earn twice their pay, which were introduced by the European Union after the financial crisis.
The post-Brexit move means a JP Morgan employee earning a fixed salary of £200,000 a year can receive a bonus of up to £2m, as opposed to £400,000 previously.
Goldman Sachs became the first Wall Street bank to scrap the EU bonus cap earlier this year by raising the maximum award to 25 times fixed pay.
The new pay rules will apply to so-called “material risk-takers,” a special classification of bank staff who can pose a risk to the lender’s financial stability.
Salaries have been ramped up in recent years to offset the bonus cap.
Bankers wary of giving up fixed pay
Bankers have been wary of giving up higher levels of guaranteed fixed pay for variable bonus payments.
This is because there is no guarantee they will receive the same amount per year, meaning things like mortgage agreements can prove harder to obtain.
However, JP Morgan is not expected to cut fixed pay for existing staff and the bonus threshold is intended to give it more flexibility to reward high performers.
The bonus cap abolition will also help London compete with New York for talent.
Wall Street companies have often been wary about moving staff from New York to London, as bankers in the US typically receive less in salary and more in bonuses.
The bonus shake-up could also give London an edge over EU financial capitals such as Paris and Amsterdam.
A JP Morgan spokesman said: “We believe we have developed one of the most attractive and balanced pay structures in the industry. Fixed pay will remain very competitive, and we will have ample room to reward the highest performers appropriately.”