Financial News

  • 10 February 2014, 3:03

Barclays Puts 140,000 Cap On Cash Bonuses

Barclays is imposing a 140,000 cap on cash bonuses for its investment bankers as it prepares to hand out roughly twice as much to employees as it does though shareholder dividends.

Sky News has learnt that the cap - the third consecutive year that Barclays has had one in place - has been reduced from 185,000 last year. In 2012 there were complaints from staff that a ceiling of 65,000 was not high enough.

Paradoxically, the cap will not affect the most senior executives at Barclays' investment bank because all managing directors have been told that they will receive no cash up front and that their bonuses will be deferred for three years.

Barclays staff are being informed about their bonuses for 2013 and salaries for 2014 during the course of business on Friday.

Hundreds of senior executives are also being told about new role-based allowances they will receive as banks attempt to circumvent new European pay rules which are being applied from this year.

On Thursday Sky News revealed that Barclays would pay close to 2.5bn in bonuses for 2013, a rise of approximately 10% on the previous year's pool. The final number is understood to be between 2.3bn and 2.4bn.

A senior source at Barclays said the bank would increase the amount paid out in dividends from around 800m last year to more than 1bn this time, a figure that will be revealed when the bank reports annual results on Tuesday.

Although that will entail paying twice as much to employees as it does to investors, the gap between the two has narrowed sharply in recent years.

Antony Jenkins, Barclays' chief executive, is expected to defend the increase by pointing to a robust performance by its investment bank in the US and the threat to its Wall Street business by attempts to poach its top staff there.

Sky News revealed last week that the proportion of Barclays' revenues paid out to staff would also increase from 2012's 39% figure, probably to 40%.

Part of the explanation for the increase on last year's payout ratio and bonus pot is the fact that the 2012 numbers were reduced sharply by moves to claw back 300m in bonuses following Barclays' involvement in the Libor rate-rigging scandal.

Nonetheless, the increase in awards for a period in which revenues struggled will make next week's results announcement an uncomfortable one for Mr Jenkins, who has vowed to make Barclays "the go-to bank" for its stakeholders.

The rise in the proportion of revenue paid out to staff will jar because the trend during the recent round of Wall Street banks' results has been in the opposite direction.

Mr Jenkins and his chairman, Sir David Walker, have pledged that pay restraint will form an important element of their efforts to reinvent Barclays in the aftermath of Bob Diamond's reign.

Sources said that Barclays would still attempt next week to demonstrate that it was exercising discipline while deciding on employees' pay awards.

A significant proportion of these will be subject to deferrals over three years and clawback in the event of subsequent evidence that the basis on which the bonuses were awarded was unjustified.

Barclays declined to comment.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Advertisement