Barclays rejigs pay deals after £6bn profit

 

Barclays has handed staff bumper pay rises to compensate for reduced bonuses after profits at the bank leaped 32% thanks to fewer bad debts.

Barclays PLC President Bob Diamond poses with current CEO John Varley and Chairman Marcus Agius, after being named as the company's next chief executive officer at their Canary Wharf headquarters in London September 7, 2010

What a gem: Bob Diamond insists he is senstive to concerns about banker pay.

Barclays reported that it made £6.2bn before tax in 2010, with both its retail and investment bank arms increasing profits. Barclays shares jumped on the news, rising 3% before settling 7.55p, or 2.4%, higher at 318.30p.

But it is likely to face accusations of chicanery on pay and bonuses.

Following the Government's deal with banks to limit bonuses and increase lending to business – known as Project Merlin – Barclays said that it had paid 7% less in performance awards than last year.

At its investment banking arm Barclays Capital the bonus pool will be 12% lower than last year.

However, overall remuneration to staff increased 20% to £11.9bn. Total performance-related pay, including bonuses which had been deferred from previous years, increased by 25% to £3.5bn.

This would suggest that Barclays staff have been handed large pay rises to offset reduced bonuses. The bank denied that this was the case and said that the figure was affected by an increase in the number of staff and by pay deferred from previous years.

Chief executive Bob Diamond is due to receive a package of more than £9m in pay and bonuses but details are unlikely to be revealed until Barclays releases its annual report next month.

He said: 'We are committed to demonstrating that we are both responsible in our compensation decisions and practices and that we take our regulatory obligations and UK Government commitments seriously. In particular, our overall performance awards in 2010 have been directly influenced by the commitments that we have made under Project Merlin.

'In reaching our final decisions, we have had to balance carefully our obligations with our need to ensure that our decisions are commercial in a highly competitive global environment.'

Barclays also announced a raft of new measures which will see senior staff bonuses deferred over three years and will only be paid if the bank meets its capital requirements under the Basel agreement.

The number of staff who will see 60% of their pay deferred has also been significantly expanded beyond the requirements of the FSA's remuneration code, the company added.

 
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At BarCap, the ratio of pay to income rose to 43% from 33% the previous year, suggesting that pay had increased to compensate for the 12% reduction in bonuses.

BarCap, which accounts for the bulk of the bank's profits, had a strong final quarter of 2010, despite City expectations that the final quarter would be disappointing following poor results from American investment banks.

The investment arm saw revenues rise to £3.4bn in the final quarter, a 20% increase on the previous three months, as bad debt reduced and it benefited from the global economic recovery.

The strong final quarter helped BarCap total income for 2010 increase 17% to £13.6bn.

In UK retail banking, profits increased 39% to £989m after a 21% fall in bad debt charges to £819m was partially offset by an 11% increase in operating expenses to £2.8bn, partly due to higher pension costs.

Lower bad debt charges also benefited Barclaycard, which increased profits by 9% to £791m in the year.

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