(Bloomberg) -- Goldman Sachs Group Inc. is preparing to scrap an EU-era cap on bonuses for hundreds of its staff in Britain, paving the way for some successful and highest-paid traders and investment bankers to make many times their base salaries.

The move, coming on the back of the UK government’s decision six months ago to remove local pay restrictions for bankers, was announced internally on Thursday by Goldman Sachs Group International Chief Executive Officer Richard Gnodde, a person familiar with the matter said, asking not to be identified discussing company information.

“This approach gives us greater flexibility to manage fixed costs through the cycle and pay for performance,” a Goldman spokesman said in an email. “It brings the UK closer to the practice in other global financial centres, to support the UK as an attractive venue for talent.”

Britain had earlier effectively limited bonus payments to twice the base salary, and the scrapping of that rule now means London’s finance industry can start the process of rejiggering compensations. Goldman is one of the first to make the UK move, but it’s also set to spark concern among some employees that their fixed pay may be cut. 

The bonus cap was first introduced by the European Union back in 2014 in response to public outcry over the financial crisis. In October, following years of industry lobbying, UK officials removed the cap as part of a broader push to make post-Brexit Britain more attractive as a financial center. 

In places like New York, these bonuses can stretch into millions of dollars and are many multiples of bankers’ and traders’ annual salaries.

“It doesn’t really make a lot of difference in terms of overall compensation - a comparison of UK versus US compensation won’t give you a huge regulatory arbitrage right now,” said Canice Hogan, chief executive officer of recruitment firm Shadowhound. “It may however lead to a slow reduction in base salaries in UK, though it’s a bold move for the first firm to start to reduce fixed pay. If anyone can do it, Goldman Sachs probably can.”

Bloomberg News has previously reported that banks including JPMorgan Chase & Co. and Goldman have been reviewing their pay policies for London staffers, with similar moves afoot at HSBC Holdings Plc and Barclays Plc. 

Banks have warned that there will be challenges to adopting this new form of compensation since many had already upended their payment structures to accommodate the cap. 

In one high-profile example, Citigroup Inc. awarded Paco Ybarra, the London-based executive who led the firm’s unit that included trading and investment banking, $8.05 million in fixed pay for his work last year, compared to the $1.5 million base salary that Chief Executive Officer Jane Fraser received. That allowed Ybarra’s total compensation of $20 million to fit within the bonus cap rules. 

Goldman’s decision was originally reported by Sky.

(Updates with details.)

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