Bankers’ bonuses will drop to reflect performance, JP Morgan chief says
Viswas Raghavan also admitted that there has been an economic impact of Brexit which needs to be “replenished”.
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Your support makes all the difference.The European boss of banking giant JP Morgan has said that its bankers’ bonuses will fall after a worse performance across the investment bank last year.
Viswas Raghavan, the chief executive of Europe, Middle East and Africa (EMEA), also admitted that there has been an economic impact of Brexit which needs to be “replenished”.
Speaking to Bloomberg TV at the World Economic Forum in Davos, Mr Raghavan was asked whether bankers’ bonuses would drop in Europe this year in the same way that they have in the US.
All the banks pay for performance so if the performance isn't there, then the compensation isn't going to be there
He said: “Absolutely. All the banks pay for performance so if the performance isn’t there, then the compensation isn’t going to be there.
“People understand – if the performance isn’t there then you don’t expect it (a bonus).”
He also admitted that last year “wasn’t great” for the bank and that it had been particularly “anaemic” in terms of performance for its investment banking arm.
Bankers’ bonuses have come into the spotlight in recent months, after former Chancellor Kwasi Kwarteng announced plans to remove a cap on how much bankers can be paid in bonuses, in efforts to make the UK a more competitive financial hub.
But some critics argued that the move risks reinstating a culture of risk-taking and greed that was rife before the 2008 financial crisis.
Clearly there is an economic/Brexit impact which needs to be replenished, and that is a work in progress
Mr Raghavan touched on the impact of Brexit on the UK’s position as a leading financial centre.
He said: “The UK is feeling the same kind of cross-currents as other emerging markets.
“But there is a bit of a nuance in the UK. Clearly there is an economic/Brexit impact which needs to be replenished, and that is a work in progress.”
JP Morgan opened a new trading hub in Paris in 2021 amid a push to ramp up operations outside London and in the European Union after Brexit.
Mr Raghavan said most of the staff moves that needed to be done have now happened, as the bank was early in its reaction to Brexit.
But he stressed that JP Morgan still has more than 18,000 people working in the UK, and it is continuing to hire under its Chase retail banking arm after launching in the region in 2021.
The boss also said the UK is feeling the effects of workforce participation rates being very low, even though the unemployment rate is low.
“That’s true of the US as well – there is a big chunk of the labour force that has not returned to work. I think that needs to improve,” he said.
He added that fiscal policy – meaning the Government’s tax decisions – is another “nuance” in the UK.
Looking at the wider economic picture, the boss said that the bank is preparing for a “mild recession” this year, but that there is “light at the end of the tunnel” with signs that inflation has already peaked.