Barclays: profits down, bonuses up. Why?

Antony Jenkins Antony Jenkins, Barclays chief executive

On the measure that Barclays prefers for assessing its progress, pre-tax profits are down by almost a third to £5.2bn.

This reflects the substantial £1.2bn costs of trying to make Barclays a more efficient and a better-behaved bank, what it calls its "transform" programme, and also a poor performance by its investment bank, where there was a drop of more than £1bn in income from trading bonds and debt (no great shock there - it is an industry-wide trend).

So what will prompt surprise and - in some quarters - outrage is the disclosure that there was a 10% increase in bonuses and other incentives awarded to staff to £2.4bn, including a 13% rise to £1.6bn in such rewards for Barclays' investment bankers (see one I wrote earlier on all this).

Investment banking profits down 37%, performance rewards for its bankers up 13% - "shome mishtake shurely? Ed" as Private Eye used to say.

And the average incentive payment per investment banker rose just over 10% to slightly more than £60,000.

Barclays chief executive Antony Jenkins told Radio 4's Today programme why such rewards had risen:

"We employ people from Singapore to San Francisco, we compete in global markets for talent. And if we're acting in the best interests of our shareholders, we have to make sure we have the best people in the firm."

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I lost count of the number of times Antony Jenkins said he wanted Barclays to be the 'go-to' bank”

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Mr Jenkins reiterated his determination to make Barclays a much more trusted bank. I lost count of the number of times he said he wanted Barclays to be the "go-to" bank. Some might say he got a bit carried away with this attempt at rebranding via the BBC.

Among his initiatives is - like Lloyds - to significantly increase the number of women in senior executive positions and to set targets for a quantitatively assessed measure of how much the bank is trusted by its customers.

But here is the dilemma, well known to him and his boardroom colleagues. Barclays is huge and global in a business (investment banking) where vast rewards are de rigueur - and getting bigger again in the US and Asia.

And if Jenkins and team want to protect the value of that business, they feel they have to pay the going rate for "talent" (what a resonantly pernicious expression that is).

The problem is that there is blank incomprehension from those not in the industry that the going rate remains so high for people widely seen as being more than walk-ons in the epic near-destruction of global financial capitalism just a short while ago.

Or to put it another way, the longer that there is a disconnection between the financial performance of the bank and the trend in so-called performance-based rewards for staff, the harder Mr Jenkins will find it to convince the wider world that Barclays really is the cleaned-up, well-behaved, go-to bank.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 798.

    Bank was much better in times of Mr Robert Diamond because at least he never blow the trumpet of Integrity and Trust. This is a disrespectful to the customers, stakeholders and internal staff members.
    There is a shame where staff who perform and generate most profit for the bank, they earn the least in the bank have to face job cuts, less salary and hardly or no bonus.

  • rate this

    Comment number 797.

    I am an employee of barclays and have gone from being proud to work for them to ashamed in the last 5 years. The "real" staff who genuinely go out of their way to help customers and who work extra hours for no overtime are not appreciated in the slightest. We have been encouraging customers to use online and mobile banking so now they don't need staff in branches! ASDA here we come....

  • rate this

    Comment number 796.

    The Barclays public relations machine touted Mr. Jenkins as the bank's new ethical face. That is why it was so disappointing to listen to him this morning. At first his constant repetition of meaningless ad-speak ("go-to bank" - ugh!) irritated beyond measure. But then the tired old justification he trotted out for giving a few gamblers massive bonuses sealed the cynicism of the whole operation.

  • rate this

    Comment number 795.

    I don't know why we were not told internally about job cuts before the media. With all these front line job cuts I hope our board is willing to invest a lot of the savings in the support services, telephone, fraud, online, international etc cause at the moment the only place were going is FTSE 250

  • rate this

    Comment number 794.

    But the Inland Revenue have the right to insist on being paid in Sterling [....]

    Executive Order 11110


Comments 5 of 798


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