News Column

Barclays hikes bonuses to hold onto top staff

February 12, 2014

TIM WALLACE



BARCLAYS has been forced to increase bonuses in a bid to attract the best staff in the US and Asia, where competition is particularly fierce, the bank's boss said yesterday.


The bonus pool increased by 10 per cent to 2.38bn, even as profits for 2013 fell 32 per cent to 5.2bn.


Chief executive Antony Jenkins said the bank can only stay strong if it pays competitively for the best staff around the world, and that this will benefit shareholders in the long term.


"We've seen increased levels of attrition, particularly in the US, and it is harder to hire people into the organisation in certain parts of the business," Jenkins said. "I recognise the decision will be difficult for some people, and I have a lot of sympathy, but I must do the right thing for shareholders."


Bonuses come to 38 per cent of the revenue, the same level as last year. Jenkins wants that to fall to the mid-30s in future - but with falling headcount individual bankers may not see pay fall.


However, shareholder group Pirc complained the bonuses are too high, noting the pool is three times larger than the dividend for 2013.


Up to 12,000 jobs will be cut this year across the world, with around 7,000 jobs lost in the UK. And as more customers use online banking, Barclays will accelerate its branch closures from the 33 closed in 2013.


Investment bank profits fell nine per cent to 2.5bn while UK retail and business banking profits fell two per cent to 1.2bn. European losses soared to 1bn, compared with a loss of 343m in 2012.


However, the total stock of mortgages outstanding rose to 122.8bn, up 8.1bn on the year and giving a 9.9 per cent market share, a record high. Mortgage profits are also rising as funding costs dip but interest rates on the loans increase.


ANALYST VIEWS Interviews by Tim Wallace ARE THERE BUSINESS LINES BARCLAYS RELY ON FOR SOLID FUTURE GROWTH? IAN GORDON INVESTEC Fourth quarter investment bank revenues of 2.1bn were up two per cent quarter on quarter. Fixed income, currencies and commodities was up 12 per cent, which compares favourably with investment bank peers. The broad absence of negative one-offs is in stark contrast to loss-making UK domestic peers.


SHAILESH RAIKUNDLIA ESPIRITO SANTO Stand out performers were Barclaycard and UK retail which produced clean profits of 375m and 331m, up 11 per cent and 20 per cent year on year, primarily due to year on year revenue growth of seven per cent, to 1.15bn and 1.2bn respectively, in both businesses.


GARETH HUNT CANACCORD GENUITY Until we see evidence that absolute costs are falling, that fixed income, currencies and commodities income has stabilised and that investment bank compensation ratios are consistently under 40 per cent, we would expect Barclays' stock to remain in the sideways pattern.


RETURN ON EQUITY DOWN TO 4.5% FROM 9.0% LEVERAGE RATIO DOWN TO 3.1% BARCLAYS PROFITS FELL IN 2013 UP TO 12,000 RECORD JOBS CUT THIS YEAR MARKET SHARE OF 9.9% PRE-TAX PROFIT OF UK INCLUDING 32% MORTGAGES 7,000 IN THE UK TO 5.2bn BONUS POOL CAPITAL 10% RATIO INVESTMENT BANK PROFITS UP TO 2.38bn 37% TO 2.5bn 9.3%


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Source: City A.M. (UK)


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