Barclays Cuts Bonus Pool As Profits Fall

Banking giant Barclays has posted pre-tax profits of £5.9bn for 2011 - a fall of 3% on the previous year.

Its income was dragged down by the investment banking arm, Barclays Capital, where pre-tax profits fell by 32%.

Trading revenues were battered by the eurozone debt crisis.

Barclays said the bonus pool across the group for 2011 was down by 26% compared to 2010.

A total pot of £2.15bn will be paid out this year, with the average payout for a group employee down 21% year-on-year to £15,200.

At Barclays Capital total awards are down by 35% to £1.5bn.

The investment banking division has capped its cash bonuses at £65,000. This compares to a £2,000 limit at the state-backed banks.

The precise amount of the bonus that will be given to Barclays chief executive Bob Diamond will not be revealed until the bank's annual report is published mid-March.

Mr Diamond is entitled to a £3.4m bonus on top of his salary, and if long term shares are included, his total could hit £11.5m.

Despite avoiding a government bailout at the height of the financial crisis, Barclays has nevertheless faced political pressure to clamp down on excessive bankers' pay.

The Barclays results show that annual incentives for executive directors and the eighthighest paid senior executive officers were down 48% compared to 2010 on a like-for-like basis.

Mr Diamond, who refused to comment on his own bonus, said: "We need to balanceremaining competitive with being responsive to the public mood."

He said the mood surrounding the industry was not positive but the private sector would only deliver much-needed growth to the wider economy with a "confident" banking sector.

But the Association of British Insurers criticised Barclays for not reducing is bonus pool enough.

The group has asked all UK listed banks to shift the balance between maintaining capital strength, delivering returns to shareholders and rewarding employees.

Otto Thoresen, Director General, told Sky News: "We are looking for a bigger step change than simply a reduction in the bonus pool boradly in line with a reduction in earnings."

In the company's results statement, Mr Diamond said: "I am proud of what our people at Barclays achieved in 2011.

"Against the backdrop of challenging economic and market conditions, we maintained our focus on clients and customers while supporting the real economy, as well as the needs of our shareholders, colleagues and the communities in which we operate.

"As a result, we have delivered a strong set of results, both financially and in terms of our execution priorities."

The bank said it had exceeded its Project Merlin lending targets to both UK businesses and small and medium-sized enterprises (SMEs).

It lent £43.6bn to businesses, including £14.7bn to SMEs.

The full year report also revealed the UK bank levy cost Barclays £325m.

The results come after weeks of conflict over bankers' bonuses, in which Royal Bank of Scotland chief Stephen Hester turned down his £963,000 bonus amid mounting pressure.

The boss of Lloyds Banking Group Antonio Horta-Osorio has also waived his payout following a leave of absence.

Campaigners from the groups UK Uncut and Move Your Money UK held a protest against Barclays profits and bonuses outside a central London branch of the bank as the results were unveiled on Friday.

Campaigning for a better banking system, many of them were Barclays customers closing down their accounts.

On Thursday Labour leader Ed Miliband accused the Government of defending the interests of the "irresponsible few" in the City.

Mr Miliband, who is trying to harness public anger over bankers' bonuses, insisted the culture in banking had to change.