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
    +1

    Comment number 18.

    With the damage do to RBS reducing its investment bank too soon. Barclays see the high profit area IS it´s investment. As long as Investment and retail are linked then this is the future.
    It would appear that the politicians are unwilling to act against the institutions that in normal time are required to buy their bonds.

    He who "buys the pipers bonds calls the tune"

  • rate this
    +57

    Comment number 17.

    They keep screwing us as long as we let them it's sickening. We have so many intelligent unemployed graduates in this country that I'm sure could do a better job than these greedy bankers who apparently can't survive on less than 7 or 8 figure salaries.

    They need to be brought back to the real world with the rest of us, where performance matters and actions have consequences.

  • rate this
    +6

    Comment number 16.

    I wonder whether Barclays Investment clients received a 13% drop in fees or a 13% improvement in their returns. We know Barclays didn't do better themselves, so were the other parameters for improved performance met?

    Or is it that Barclays HQ merely does not know how to price its Investment Div jobs, pitches salaries low & dangles the prospect of a (big) bonus 'pour encourager les autres'?

  • rate this
    +53

    Comment number 15.

    I notice in your piece that the smiling assassin never mentioned "we are working to benefit of our customers".
    Let me guess the 12000 cuts will be branch closures and more UK call centre jobs sent to some country where we cant understand what they are saying and they can understand us.

  • rate this
    +122

    Comment number 14.

    When he says they need to find financial ''talent'', does he mean 'search for greedy, self-absorbed, kids that would rob their own granny for a fiver?'

  • rate this
    +7

    Comment number 13.

    Money, money, money must be very funny in a rich man's world!!

    Barclays can pay bonuses and increase them but they can't do basic arithmetic.

    Now they have announced staff cuts - begs the question how much will be added to bonuses for every job which is cut. Less paid in salaries = bigger bonuses for the boys at the top.

    Beats the hell out of me!!

  • rate this
    +15

    Comment number 12.

    'Barclays plans to cut between 10,000 and 12,000 jobs this year, including 7,000 in the UK'

    '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'

    Please explain . . .

  • rate this
    +38

    Comment number 11.

    So yesterday we were asked about banks improving standards and today we see this. Profits down, 12,000 jobs to go but bonus's up.
    Only in the banking industry.
    Yep, we're all full of confidence in banking now....not.

  • rate this
    +9

    Comment number 10.

    How many investment bankers are there. If one hypothetically moralistic bank said they'll only pay half as much and insist on socially acceptable behaviour, would all its investment bankers be able to find alternative employment? Would said bank perform half as well if they remained?

  • rate this
    +96

    Comment number 9.

    Barclays to cut 12,000 jobs - thank god I got out of that firm and into an industry that adds value to society. I'm now paid less but now I don't have to spend 40 mins in the shower every evening scrubbing the shame off my flaking skin.

  • rate this
    +11

    Comment number 8.

    "in the epic near-destruction of global financial capitalism just a short while ago"

    I don't believe the fat lady has made an appearance yet Robert, six years later, nothing has changed... apart from the ever increasing pressure on the public purse.... oh and the 80bn handed out to the fraudsters as bonuses.

    and 5. correction. Davos not Sochi.. although they are probably there too...

  • Comment number 7.

    All this user's posts have been removed.Why?

  • rate this
    +102

    Comment number 6.

    These guys could drown kittens and argue for extra pay for managing the press fallout.

    The old justification of "we have to pay this much because these guys are actual geniuses" seems to have been replaced by "we have to pay this much because we pay this much"

    It reminds me of drug dealers and pimps attempting moral justification using the catch-all "If I didn't do it someone else would"

  • rate this
    +81

    Comment number 5.

    Surely this should read, "low paid staff at Barclays to be fired, higher paid staff to receive more"...

    This idea of 'keeping talent' would be dismissed for the hogwash it is. The only way to effect change is via a maximum wage as a multiple of the lowest earner enacted globally. Didn't the 'masters of the kleptoverse' at Sochi say that inequality was the most dangerous threat to the world?

  • rate this
    +10

    Comment number 4.

    I heard this man on R4 today. I have seldom heard such a load of hogwash. He kept spouting a self-satisfied slogan (devised by his policy advisers?)

    He showed no sign at all of getting that it is honesty and probity that we expect from him and his bank. To him it was just a marketing stunt. This will go down well with investors - because he is absolutely not going to change the bank!

  • rate this
    +6

    Comment number 3.

    Well the conclusion is that the bonuses cannot be performance related. Retention payments at best but it is easy to say that they must pay the going rate but in other countries going that extra mile or two for the company can result in jail! This is another bank that likes to say 'Yes' but is not too sure why? Why should HMG subsidise Barclays lavish bonuses with the £80,000 savings guarantee.

  • rate this
    +6

    Comment number 2.

    "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."

    Best does not mean richest!

    And why does ethical behaviour 'cost' £1.2bn?

  • Comment number 1.

    All this user's posts have been removed.Why?

 

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