Key Takeaways
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JPMorgan and Citigroup are reviewing reductions to fixed pay allowances for senior UK executives following regulatory changes.
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Recent UK reforms have eased bonus deferral rules, reducing the need for large fixed-pay components.
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Any changes are expected to alter pay structure rather than materially reduce total compensation.
JPMorgan Chase and Citigroup are considering cuts to fixed pay for senior executives in the UK as banks adjust to changes in local remuneration regulations. According to reports citing sources familiar with the matter, both institutions are reassessing the role of fixed allowances that had previously been used to offset strict bonus deferral rules.
JPMorgan is expected to decide in the coming weeks whether to reduce or remove fixed allowances for staff classified as “material risk takers,” a group that includes senior traders, investment bankers, and compliance leaders. Citigroup is conducting a similar review, with discussions focused on aligning UK compensation structures more closely with global standards.
Regulatory Changes Drive the Review
The reassessment follows regulatory adjustments introduced in October, when UK authorities relaxed bonus deferral requirements and shortened the vesting timeline for discretionary pay from eight years to four. These changes have reduced the necessity for fixed allowances, which had grown in importance after the European Union’s 2014 cap on banker bonuses.
With more flexibility now available, banks are revisiting how compensation is structured rather than the overall level of pay. Sources indicate that most affected employees are unlikely to see a significant reduction in total remuneration, though the balance between fixed salary, cash bonuses, and stock awards may shift.
Alignment With Broader Industry Moves
The reviews at JPMorgan and Citigroup mirror steps already taken by other global banks. Goldman Sachs Group confirmed in 2024 that it lowered fixed allowances for hundreds of UK-based material risk takers after bonus restrictions were lifted. HSBC Holdings has also ended fixed-pay allowances for executive directors, with further details expected in its annual report.
Not all institutions are moving in the same direction. BNP Paribas has indicated it will not change its allowance policy, highlighting divergent approaches within the European banking landscape.
What It Means for UK Banking Pay
For JPMorgan and Citigroup, the proposed changes are aimed at reshaping pay composition rather than reducing competitiveness. A larger share of compensation could shift toward immediate cash and immediately vested stock if fixed allowances are scaled back, maintaining overall incentives while improving flexibility.
The broader implication is a gradual normalization of UK banker pay structures, bringing them closer to global practices after years of distortion caused by bonus caps and extended deferral periods.
For a confidential discussion on how UK regulatory shifts and global bank remuneration structures may influence investment exposure to international financial institutions, contact our senior advisory team.
