Scandal-hit JPMorgan Chase reveals it paid average HK$25.7m to more than 100 staff in London in 2012, as EU brings in rules limiting bonuses

SCMP.com

The biggest US bank, JPMorgan Chase, paid more than 100 of its London staff an average of £2 million (HK$25.7 million) in 2012.

The disclosure came as fresh evidence emerged of the massive deals being paid in the City of London financial district despite an outcry over banking "fat cats" after the 2008 credit crisis.

Goldman Sachs has already said its high-fliers received an average of £2.7 million in 2012 - up by half on the year before - fuelling fresh anger about bankers' bonuses.

The banks are required to provide the information about their operations in the UK to comply with an EU rule introduced after the 2008 crisis. Banks must give details of the pay of "code staff", those deemed to be taking and managing risk.

The details of the pay awards come as new rules from Brussels come into force to restrict top bankers' bonuses to one times their salary, or twice with the approval of shareholders.

Sharon Bowles, of the European parliament's economic and monetary affairs committee, said the move was intended to change the culture of banking.

"The bankers' bonus cap is part of building a much-needed culture change, putting an end to the sort of short-termism and excessive risk-taking that led to the financial crisis," she said.

Royal Bank of Scotland also gave its new chief executive, Ross McEwan, £1.5 million in shares on New Year's Eve as part of a pre-arranged deal to hire him 18 months ago from Commonwealth Bank of Australia.

The move ensures the bailed-out bank's pay policies will receive fresh scrutiny this year.

The latest information from JPMorgan shows it had 126 code staff in 2012 who received a total of £41 million in "fixed remuneration", such as salaries, and another £222m in "variable remuneration", such as bonuses, half of which was paid in shares that have to be held for two years. The payments were down on the £2.2 million average from 2011.

They were made after the bank reported record net income of US$21 billion for 2012, despite the losses caused by the so-called "London Whale" trading scandal, for which the bank has faced action from regulators on both sides of the Atlantic.

It has paid fines totalling US$920 million to regulators in the US and the Financial Conduct Authority in the UK as a result of the affair.

Britain's finance minister George Osborne and City regulators are opposing the bonus cap, which came into force on New Year's Day.

They argue it will force up the fixed costs of banks because they will simply raise salaries or pay additional allowances to staff to keep up pay levels - as Barclays has said it plans to do. The disclosures by JP Morgan about its split between fixed and variable pay - £41 million compared with £222 million - illustrate the way bonuses are given relative to salaries.

While pay experts expect absolute levels of pay for most bankers will not fall after the bonus cap, they argue it could reduce pay deals for those on boards or on executive committees, one rung below the boardroom, because shareholders will refuse to sanction bigger pay deals for them.

The Archbishop of Canterbury, Justin Welby, waded into the pay debate this week, saying: "I don't want to name names, but I came across some people recently - senior members of the City from foreign organisations - who were very clearly still absolutely in denial about what happened in 2008."

One outcome of the financial crisis has been demands for more information about bonuses to be published. The European Banking Authority published data in November that showed 2,714 bankers in the UK classified as code staff received more than €1m (HK$10.7 million) in 2012.