Goldman Sachs will cap the salary and bonuses of its top London staff at £1m.
The investment bank is expected to inform its senior bankers and traders this week about the proposed clampdown, the Times has reported.
In good economic times, top bankers at Goldman Sachs have received bonuses of £10m each.
The cap is the latest in a string of cuts introduced by banks in response to the government’s 50% tax on bonuses and new pay guidelines from the Financial Services Authority (FSA), the City regulator.
Under the FSA’s rules, anyone earning more than £1m is required to take 60% of their bonus in deferred shares.
Barclays has announced it will defer bonuses for three years, while Credit Suisse has cut UK payouts by 30%.
Members of Goldman Sachs’ global management committee will take all their pay in deferred shares, but they will not be able to sell any of it until 2015.
Last week, Goldman Sachs said it would pay a total of $16bn (£9.9bn) to its staff – a lower figure than expected, although it works out at an average of more than £300,000 per person.