Citigroup to Remove Bonus Cap for London Investment Bankers

Following the UK's Departure from the EU

US Bank Ends Long-Standing Restriction

Citigroup is set to become the latest US bank to remove an EU-imposed bonus cap for its London investment bankers, following the United Kingdom's departure from the European Union.

The cap, introduced in 2014 to limit excessive risk-taking, restricted bonuses to no more than 100% of an employee's salary. However, with the UK now outside the EU's regulatory framework, banks are free to set their own bonus schemes.

Other US banking giants, including Bank of America, Morgan Stanley, and JPMorgan, have already announced plans to remove the bonus cap for their London operations.

Policy Implications

The move by Citigroup is seen as a sign of increasing US influence in the UK financial sector post-Brexit. It could also lead to a potential talent war among banks competing for top investment bankers in London.

Industry Impact

The removal of the bonus cap could boost morale among investment bankers and provide them with greater financial incentives to take risks. However, it also raises concerns about the potential for excessive risk-taking and the erosion of responsible banking practices.

Conclusion

Citigroup's decision to remove the bonus cap is a significant development that marks a shift in the regulatory landscape for investment banking in London. It remains to be seen whether this change will lead to increased innovation and growth or a resurgence of the risky behaviors that contributed to the financial crisis of 2008.