Barclays slashes bonus pool by a third as profits slide
BANKING giant Barclays today revealed that it has slashed the bonus pool for its investment banking arm by 32% to �1.5billion for 2011, as it posted a 3% fall in annual profits.
Amid mounting pressure on the sector over the controversial payouts, the bank said the average bonus for staff at its Barclays Capital operation had been cut by 30% to �64,000 as volatile market conditions saw the powerhouse division’s profits slide 32% to �2.96bn.
The group total bonus pool was down 25% at �2.2bn with the average payout for a group employee down 21% year on year to �15,200.
Elsewhere, the bank, which reported pre-tax profits of �5.8bn for 2011, said it had capped the cash part of bonuses for investment bankers at �65,000. This compares to �2,000 at the state-backed banks.
The results come after weeks of conflict over bankers’ bonuses, in which Royal Bank of Scotland chief Stephen Hester turned down his �963,000 bonus amid mounting pressure and Lloyds boss Antonio Horta-Osorio waived his own payout following a leave of absence.
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Barclays chief executive Bob Diamond refused to be drawn on questions about his own bonus, amid reports he could be in line to receive more than �11million in payouts.
The results said that annual incentives for executive directors and the eight highest paid senior executive officers were down 48% compared to 2010 on a like-for-like basis, though Mr Diamond would not confirm how his own pay fitted into this decline.
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Those hoping for a peek at Mr Diamond’s pay packet will have to wait until the annual report is published in mid-March.
But addressing the wider issue of bonuses, he said: “We need to balance remaining competitive with being responsive to the public mood.”
He said the mood surrounding the industry was not positive but the private sector would only deliver much-needed growth to the wider economy with a “confident” banking sector.
And Mr Diamond hailed Barclay’s business lending record in 2011 as it beat the so-called Project Merlin targets drawn up between Britain’s top five banks and the Government.
Barclays delivered �43.6bn of gross new lending to UK businesses, including �14.7bn to small and medium-sized enterprises, exceeding its Merlin target by 13%.
“We really got on our horses to get businesses going,” Mr Diamond said.
The improved lending figures came as the business revealed income growth in every division except investment arm BarCap.
The UK retail and business banking division, where customers increased by 3% to 760,000, saw pre-tax profits increase 60% to �1.4bn, when stripping out the impact of a �400m charge for compensation for mis-selling payment protection insurance.
The division saw the number of current accounts increase by 2% to 11.9m, savings accounts were up 5% to 15.1m, while mortgages increased 2% to 930,000.
David Fleming, Unite national officer, said: “The announcement on bonuses today by Barclays is yet another illustration of the banking sector continuing to ignore the public outrage and disgust at their behaviour.
“Serious questions exist about the moral backbone of those running the financial service sector, while they find it acceptable to ignore the misery working people face with our economy in turmoil.
“The strong results announced today reflect the hard work done by the thousands of low-paid Barclays staff in bank branches, processing and call centres. However, there remains an unacceptable disparity between the huge pay awards to the select few at the top of the organisation and the majority of the workforce.
“In 2011 alone Barclays cut 6,000 staff globally, yet its top bankers are today being remunerated with these enormous bonuses.
“Instead of awarding the bosses outrageous bonuses, the banking sector needs to give something back to our communities. Barclays must now realise that cash-rich multinationals need to plough something back into society, instead of simply rewarding one another with fat bonuses.”