Banking giant Barclays bonuses set to be slashed

Feb 13 2010 by Peter McCusker, The Journal

BANKING giant Barclays is to cut the proportion of revenues paid out for pay and bonuses to its lowest level for 10 years.

The group is said to be preparing to slash its so-called compensation ratio for 2009 to 38%, down from 44% the previous year, ahead of next week’s annual results announcement, according to Sky News.

The move comes as banks seek to cool anger over City pay plans amid concerns of a return to excessive remuneration so soon after the financial crisis and taxpayer-backed bail-outs.

The start of the UK bank reporting season is likely to be dominated by bonus plans.

Barclays is expected to report profits of around £10.3bn for 2009 – up 70% on the year before, powered ahead by its Barclays Capital investment banking arm.

It has been a clear UK winner from the financial crisis after avoiding state support.

The reported plan to drop the compensation ratio to 38% is likely to still see multi-million- pound handouts for its top bankers.

And it comes after US groups have taken tough action to cut the ratio – by as much as half for JP Morgan, which reduced the proportion of revenues paid out for compensation from 62% in 2008 to 33%.

Barclays declined to comment, but confirmed previous pledges to meet the international G20 rules on pay reforms, which recommend clawback clauses and deferral over a number of years.