Feb. 12--Barclays has been blasted by one of the UK's leading business groups for short-changing shareholders and dodging an EU cap on bonuses.
The Institute of Directors slammed the bank's decision to hike its bonus pool for last year by 10pc to pounds sterling 2.38bn.
It said it 'cannot be right' for bonuses to be 'almost three times bigger than the dividends paid to shareholders'.
Despite pledging to give investors a bigger slice of the cake, Barclays confirmed it had paid out just pounds sterling 859m in dividends,
Roger Barker, director of corporate governance at the IoD, said: 'The question must be asked – for whom is this institution being run?'
Last night bank insiders dismissed the claims as 'illogical' and pointed out that the pounds sterling 859m figure covered the year up to the end of 2013. Shareholders will receive their final dividend payout in March, with the total for the calendar year expected to be about pounds sterling 1bn.
The row erupted as Barclays (down 10.3p to 264.7p) announced it has hiked its bonuses by 10pc to pounds sterling 2.4bn, despite a slump in profits and thousands of job cuts. Some 7,000 redundancies will be made in the UK, with up to 12,000 cuts worldwide. But it said its 'casino bankers' enjoyed a 13pc increase in their windfalls, sharing a pot of pounds sterling 1.57bn.
The huge payout, which equates to pounds sterling 60,100 on average, came as the investment bank's profits for last year fell 37pc to pounds sterling 2.9bn. The bank also awarded a higher proportion of its earnings as bonuses.
Chief executive Antony Jenkins sought to justify the bonus bonanza. He argued the bank needed to 'pay competitively' and 'pay for performance', adding that the pay hike 'was in the long-term interests of shareholders'.
But Ian Gordon, an analyst at Investec, described the pay at the investment bank as 'inappropriate'. The scandal-hit lender also came under fire for trying to swerve restrictions on bonuses imposed by Brussels in January. The cap limits banks to paying a maximum of one year's annual salary as a bonus, rising to twice salary if shareholders approve.
This was supposed to stop the casino-style behaviour that led to the financial crisis. Barclays has been dishing out monthly cash payments to top staff since January. These are classified as part of employees' basic pay, so do not count towards their bonus.
Banks claim that they have to do this to avoid an exodus of staff to Asian and US rivals and have received the support of the Chancellor, who has launched a legal challenge against the pay restrictions. But Barker from the IoD said: 'Efforts to pay high bonuses based on exploitation of loopholes in the EU bonus rules send a bad signal.' Andrew Tyrie, chairman of the Treasury Select Committee, also slammed Barclays' tactics but said it demonstrated the fallacy of a 'crude bonus' cap.
Stripping out costs such as compensation for mis-selling, profits at Barclays slumped to pounds sterling 5.2bn. When these costs are included, profits rose from pounds sterling 797m to pounds sterling 2.9bn.
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