Barclays bankers land £191,000 pay and bonus

Feb 17 2010 by Iain Laing, The Journal

MORE than 23,000 investment bankers at Barclays pocketed an average £191,000 in pay and bonuses as the banking giant surged to record profits of £11.6bn last year.

The payouts provoked anger despite chief executive John Varley and president Bob Diamond sacrificing bonuses for the second year in a row in a bid to pacify clients and shareholders hit by recession.

Barclays beat City expectations with a 92% jump in pre-tax profits – helped by the sale of its fund management arm and a bumper haul from investment banking arm Barclays Capital.

The bank acknowledged the intense public interest and concern over pay and said the share of BarCap revenues paid in salary and bonuses fell from 44% to 38% – but the total pot was almost double the previous year at £4.5bn.

Across the whole group, Barclays paid out £2.7bn in bonuses – £1.5bn in cash bonuses and £1.2bn in long-term awards vesting over three years.

Of this around 80% or £2.1bn was paid out in bonuses to investment bankers, although Barclays has “managed down” the pay pot to reflect the £225m paid to the Treasury under the bonus tax introduced at the end of last year.

Mr Varley said the bank had got to be sensitive about what it paid when public-sector workers were facing salary freezes due to recession, but it had a responsibility to investors and clients to field the best team.

“The market for the best people is both global and intensely competitive,” he added. Alongside the gesture of Mr Varley and Mr Diamond, all bonuses for other top directors will be deferred over three years and subject to clawback.

Pay principles from the Financial Services Authority (FSA) and G20 summit have also been implemented.

Royal Bank of Scotland – which is 84% owned by the taxpayer – is likely to use Barclays’ payouts to gauge the level of its own bonuses to investment bankers, to be unveiled at annual results next week.

A reported £1.3bn payout will be hugely controversial amid a second year in a row of huge losses for the struggling bank.

TUC general secretary Brendan Barber said the Barclays profits showed that banks win in both good times and bad and called again for a Robin Hood tax on financial transactions.

He said: “Paying huge bonuses when people are still losing their jobs and businesses cannot get the loans they need because of a crash made in the finance sector goes against every concept of fairness.”

Barclays turned to the Middle East instead of the taxpayer to raise emergency capital at the height of the crisis but gained from support measures for the system as a whole.

“It is not good enough for Barclays to say that they did not receive direct aid. All the banks have gained because it’s now clear that whatever they do the State will bail them out,” Mr Barber said.

But Barclays stressed it had lent an extra £35bn during 2009 – far beyond its £11bn pledge last April – to support the UK economy as it claws its way out of recession. This was split broadly between households and businesses.

Chairman Marcus Agius said the bank would be judged by “how we lend and how we pay”.

Shares in Barclays jumped as much as 9% following the better-than-expected performance. Profits were boosted by a £6.3bn one-off gain from its sale of fund management arm Barclays Global Investors to US giant BlackRock, as well as a near-doubling of pre-tax profits at BarCap to £2.5bn.