The awards for performance in banking go to . . .
With profits down, Barclays has few supporters for its boosted bonuses
Barclays chief executive Antony Jenkins Antony Jenkins justified the bonuses by insisting the bank had to pay top dollar to attract and retain the best staff.
As profits at the bank slid by almost a third, to £5.2 billion (€6.27 billion), bonuses were hiked 10 per cent, to £2.4 billion. Shareholders, whom the bank tapped for £5.8 billion last year, had to make do with £859 million in dividend payments. Lest we forget, it’s the shareholders who own the company.
The disconnect between performance and rewards is even more marked in figures from the investment banking side, where the bulk of the bonus money goes.
After falling into the red in the fourth quarter, investment banking profits tumbled 37per cent last year but, despite this, £1.6 million is being paid out in bonuses, an increase of 13 per cent on the previous year.
Just what do bankers at Barclays have to do to suffer the loss of their beloved annual windfalls?
The bank’s largesse sparked a furious reaction – and not just from the usual suspects. The Institute of Directors, no less, slammed the payments in a strongly-worded statement.
It cannot be right that the bonus pool is nearly three times bigger than the dividend payout, said the IoD’s director of corporate governance, Roger Barker. “For whom is this institution being run?” he asked.
Barker believes, however, that it is a matter for shareholders, rather than the government. The large investment fund managers “have a duty to the ordinary workers whose pensions they are investing”, he said, yet they continue to take a “supine” approach to bank bonuses. There was a furious reaction too from the TUC, which said Barclays had “stuck two fingers up to hard-pressed families across Britain” with its bonus announcement.
The opposition Labour party was also swift to slam the payments, calling for a tax on bonuses with the proceeds to be put towards funding jobs for the young unemployed.
The Unite union, meanwhile, said the culture change promised at the bank will be “less than skin deep if those at the top still hoover up obscene amounts of money while workers in call centres struggle by on low wages and face the persistent pressures of job insecurity”.
The bonus row comes at a particularly sensitive time for Barclays, which revealed yesterday that it is cutting up to 12,000 jobs, about 7,000 of which will be in the UK.
A number of those – about 800 – will be senior staff, including 400 from the investment banking side, but many more will be lowly-paid staff who work in its branches.
Jenkins has waived his bonus of £2.75 million but he might as well not have bothered, given the outrage over the rest of the payments.
Rewards for failure
The Barclays boss justified the bonuses by insisting the bank had to pay top dollar to attract and retain the best staff. “At Barclays, we believe in paying for performance,” he said.
But that’s the problem – the opaque way the payments are calculated means the bank can continue to pay out even in a year when profits crumbled. No matter how hard Jenkins attempts to justify the payments, to everyone else they reek of rewards for failure.
Have no lessons been learnt from the financial crisis?
Among the buzzwords trotted out by the bank yesterday were the “five Cs” – customers, colleagues, citizenship, conduct and company.
There are some specific targets within these, such as increasing the proportion of women in senior roles from 21 per cent to 26 per cent, but performance in the otherwise extremely vague five categories will be taken into account when payouts are decided at the end of the year, the bank said.
Barclays is also at the centre of a storm on data protection, after it emerged at the weekend that confidential details on 2,000 of its customers appear to have been stolen and sold on to fraudsters. The details are understood to include names, addresses, phone numbers, passport numbers and details of their personal finances.
Jenkins admitted yesterday that the first indication he’d had of the damaging data breach came in a call from a newspaper at the weekend.
Barclays could be hit with a hefty fine for the breach, which would be just the latest in a series of penalties that have been levied on it recently for a variety of failings, from Libor-rigging to payment protection insurance mis-selling.
The Barclays chief executive has promised to review and strengthen the bank’s security, although the password it chose for yesterday’s conference call with analysts hardly inspired confidence. It was easy to remember though: Barclays.
Fiona Walsh is business editor of theguardian.com