Barclays boss defends bonus as forex rigging fines weigh on bank results
|
Version 0 of 1. The boss of Barclays has been forced to defend his £5.5m pay packet as the bank set aside £1.25bn in preparation for a wave of fines and penalties for rigging foreign exchange markets. Antony Jenkins – who is in the midst of cutting 19,000 jobs and scaling back the once dominant investment bank – said he would take his first annual bonus of £1.1m since taking the helm in the wake of the 2012 Libor-fixing scandal. “I completely understand that I am very well remunerated for what I do. But ... I think it is appropriate that I accept my bonus,” said Jenkins, who revealed he was taxed on his worldwide income both in the UK and, as a green card holder, in the US. The bank provided a comparative figure of £1.6m for his pay in 2013. Frances O’Grady, general secretary of the TUC, said his £5.5m pay would take someone working full time on the minimum wage 465 years to earn. A spokesman for the Robin Hood tax campaign said: “Bonus season has again been dominated by pay controversies, scandals and fines – underlining that too little reform has taken place in the sector.” However, the Institute of Directors, which was very critical of the bank a year ago for increasing bonuses as profits tumbled, felt placated by the fall in the bonus pool to £1.9bn, 22% down on a year ago. Profits were knocked 21% lower to £2.3bn by a string of legal and regulatory issues, including £1.1bn for compensating people missold payment protection insurance. A £935m hit for the way loans for education, social housing and local authorities are valued also ate into the bottom line although the bank preferred to focus on adjusted profits, which increased by 12% to £5.5bn. The bank acknowledged that part of the fall in the bonus pool was the result of separate allowances being handed out, alongside salaries and bonuses, to sidestep the EU bonus cap. The cap limits bonuses to one times salary or twice if shareholders approve. With these allowances stripped out the bonus pool was down 11%. The bank said 359 people earned more than £1m, compared with 481 the year before. Three received more than £5m, including one who received around £10m. Meanwhile, 72,262 staff were paid £25,000 or less. These are likely to be branch staff as well as those in India, where it employs more than 12,000 people, and across Africa. The investment bank, which grew rapidly under Jenkins’ predecessor Bob Diamond, reported a 32% fall in profits to £1.3bn and an increase in its cost-income ratio – a measure of efficiency – to 82% from 77%. Bonuses in the division were down by 24%, on one measure, although the bank insisted payouts to staff had fallen in line with profits. Simon Walker, the IoD director general, said: “The group as a whole appears to be taking significant steps to change its structure and improve its internal culture.” Jenkins said the investment bank could be cut back after its return on equity – a measure of performance – was 2.7%, far below the 12% being targeted. “I’m not a very patient person,” he said. Jenkins is also cutting high street branches – 91 were shut last year – as customers switch to banking online or via digital channels instead. In its legal warnings, Barclays said another unnamed regulator was investigating its 2008 fundraising from investors in Qatar. The Financial Conduct Authority wants to fine the bank £50m. It also facing scrutiny from the Serious Fraud Office and the Department of Justice and the Securities and Exchange Commission in the US. Barclays also noted it was providing information to the US justice department in an unconnected investigation into precious metals trading. After withdrawing from an industry-wide settlement last year, when six banks were fined £2.6bn, Barclays is yet to be fined for rigging foreign markets. It will find out by 27 June if the potential fine will have an impact on the non-prosecution agreement that the bank signed with the justice department at the time of its 2012 Libor fine. Sir John Sunderland, chair of the the remuneration committee, said the bonus pool had been reduced as a result of the anticipated fines for foreign exchange manipulation and that bonuses were being withheld from some staff. The bank is paying a 6.5p dividend for the year – lower than the City had been expecting. The shares fell more than 2%. |