Barclays Chief Defends Bonuses Amid Public Anger

Chief executive John Varley said Barclays bank is entitled to pay hundreds of millions in bonuses as it made a profit of £6.1 billion. Varley's defense comes as the UK government and other banks face mounting pressure to address growing public discontent over bonuses. Senior executives, including those at Barclays, are being urged to consider whether they should be taking bonuses at all, given the financial meltdown and subsequent government bailouts. Meanwhile, rival Royal Bank of Scotland, which received a £20 billion taxpayer bailout, is struggling to make a profit and has not paid bonuses.

Key Takeaways:

• Barclays made a profit of £6.1 billion, justifying bonuses for top staff, according to John Varley.
• Varley acknowledged the bonus culture has changed and the banking industry needs to overhaul its reward system.
• Main board directors at Barclays will receive no bonuses, but leading executives like Roger Jenkins may still get multi-million pound packages.
• Total staff costs at Barclays fell from £7.1 billion in 2007 to £6.25 billion in 2008, despite a 15% increase in employees.
• Average pay and bonus for 18,600 Barclays Capital employees dropped from £193,000 to £124,000 last year.
• Yvette Cooper, Chief Secretary to the Treasury, urged senior executives to examine their consciences on bonuses, saying they need to take responsibility.
• Lloyd Blankfein, Goldman Sachs CEO, wrote in the Financial Times that compensation needs to change, particularly for banks that received government bailouts.

Statistics:

• Barclays profit: £6.1 billion
• Total staff costs: £6.25 billion (2008)
• Total staff costs (2007): £7.1 billion
• Increase in employees: 15% (from 135,000 to 155,000)
• Average pay & bonus for Barclays Capital employees: £124,000 (2008); £193,000 (2007)
• Yvette Cooper's warning to bankers: "Senior executives need to take responsibility and consider whether they should be taking bonuses"

Sources:

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