Goldman Sachs caps partners' pay at £1m

The investment bank's move represents a sacrifice of several hundred million pounds, according to the BBC, with one executive saying it wants to be seen to be "exercising restraint".

But many UK executives below partner level will still earn more than 1 million, the BBC said.

The bank is said to believe that restricting pay packets could damage the institution's ability to recruit and retain the best staff.

Last week Goldman, which employs 5,500 people in the UK, announced it had set aside 16.2 billion dollars (10 billion) for compensation and benefits last year - a whopping 48 per cent above 2008 levels.

But the bank said its share of revenues paid out in salary and benefits for 2009 was 35.8 per cent - its lowest as a public company.

Last week the banking industry was rocked when US president Barack Obama pledged the biggest overhaul of Wall Street since the 1930s.

He said he wanted to ban retail banks from using their own money in investments and to restrict banks' abilities to make high-risk trades.

And in a UK attempt to restrain bank pay last year, the Chancellor, Alistair Darling, announced plans for a one-off 50 per cent tax on bankers' bonuses as part of his pre-Budget report.

This weekend it emerged that British high street giant Barclays was likely to defer paying bonuses to its highest earning staff.

Directors and senior staff at the bank could have their bumper payouts postponed for up to three years.

Royal Bank of Scotland, which is 84 per cent owned by the taxpayer following a string of bail-outs, is expected to pay up to 1.5 billion in bonuses to its investment bankers.