Barclays Defends Bonuses Amid Public Anger and Government Pressure

Strategic Insights -

Barclays Chief Executive John Varley has sparked controversy by defending the bank's decision to pay hundreds of millions of pounds in bonuses. Despite the financial institution making a profit of £6.1 billion, Varley acknowledged the changing public mood and promised an overhaul of the banking industry's reward system. The move comes as Chief Secretary to the Treasury Yvette Cooper called on bankers to examine their consciences on bonuses.

Key Takeaways:

  • Barclays Chief Executive John Varley defended the bank's decision to pay bonuses, citing a profit of £6.1 billion, despite a 14% decrease in profits.
  • The bank's bonuses for last year were 48% lower compared to the previous year, with bonuses being reduced from £193,000 to £124,000 for employees at Barclays Capital.
  • Total staff costs at Barclays fell from £7 billion in 2007 to £6.25 billion last year, despite a 15% increase in employees from 135,000 to 155,000.
  • Main board directors at Barclays will receive no bonuses.
  • Industry insiders predict that senior executives, such as Roger Jenkins at Barclays, will receive packages worth millions of pounds.
  • Lloyd Blankfein, Chief Executive of Goldman Sachs, acknowledged the need for a change in compensation calculation, especially after his bank used the US government bailout.

Statistics:

  • Barclays made a profit of £6.1 billion in 2007.
  • The bank's profits decreased by 14% in 2008.
  • Bonuses for last year were 48% lower compared to the previous year.
  • Total staff costs at Barclays fell from £7 billion in 2007 to £6.25 billion in 2008.
  • The number of employees at Barclays increased from 135,000 to 155,000 last year.
  • Average pay and bonus for the 18,600 employees at Barclays Capital fell from £193,000 to £124,000 last year.
  • Lloyd Blankfein, Chief Executive of Goldman Sachs, was paid £46 million in bonuses in 2007.

Sources:

  • NICK GOODWAY AND JONATHAN PRYNN, "Barclays chief defends bonuses amid public anger", The Times, unknown date.
  • Lloyd Blankfein, "Compensation Needs a Change", The Financial Times, unknown date.
  • Barclays Annual Report, 2008, unknown date.