The soaring payouts, a result of the boom in the City's share and bond markets, were attacked by union leaders as a sick joke two days after the bank warned 432 branch staff they faced compulsory redundancy.
But Martin Taylor, the bank's new chief executive, hit back at critics for being 'squeamish' about the bonuses and said the management would not be thanked for underpaying people at BZW, where profits rose 65 per cent to pounds 501m.
When the markets were producing large profits the bank had to pay the market rate or it would lose its staff, he said.
The BZW bonuses average about pounds 16,000 a head, but in practice are heavily concentrated on a small number of dealers and executives. Total bonuses and profit-sharing at Barclays cost more than pounds 150m.
Barclays salaries rose pounds 137m, with most of the increase in BZW. In 1992, David Band, chief executive of BZW, received a pounds 275,000 profit- related bonus, and his higher 1993 rewards are likely to be published shortly.
Barclays group turned around dramatically from a loss of pounds 242m in 1992 to profit of pounds 664m before tax last year, but this was at the lower end of City predictions. The bank was held back by North America, where it lost pounds 675m because of higher provisions for bad debts, especially property. There were also losses in France.
A group of damaged businesses in the US, put into a unit called United States Transition, lost pounds 346m on its loans, pounds 236m in a mortgage company and pounds 93m on other costs. The heavy deficit compared with a loss in the same businesses of pounds 123m the year before.
Mr Taylor said he did not consider group profits would be decent, 'let alone excessive', unless the bank made more than pounds 2bn. He also said he did not expect future dividend cover to rise much above two, compared with 1.3 in the latest year, when the dividend was held constant at the much reduced 15.2p level established for 1992. The bank strengthened its capital significantly.
Mr Taylor took a tough line with criticisms by the Banking, Insurance and Finance Union of the job shedding plans, which call for a new round of 5,000 job losses. He was astonished that banks were regarded as different from other commercial organisations, which all had to cut costs.
The bank could have been accused of starting cost reduction in the UK too late because it had been done with great pain over the last two to three years, he said.
It could also be accused of letting the best people go in voluntary redundancy schemes, rather than doing what he considered the managerial duty of letting the less productive go.
Mr Taylor, who previously ran Courtaulds, the textile group that has in the past shed large numbers of staff, made clear he was shocked by the way banks had let staff numbers go adrift. 'I am absolutely astonished that ordinary managerial principles are not yet established in this industry.'
He said compensation for people leaving Barclays was 'admirably full and much higher than in most other industries'. But he attacked as wicked and cynical those who circulated scare stories about much larger job losses.
The group's bad debt provisions were the other main factor behind the return to profit, besides BZW's performance. They fell from pounds 2.5bn to pounds 1.9bn for the year.
UK Banking Services, where most of the job losses are concentrated, showed a big turnaround from a loss of pounds 444m to a profit of pounds 632m. The banking division made pounds 879m against a pounds 195m loss in 1992.
The UK showed a reduction in bad debt provisions from pounds 1.92bn to pounds 1.286bn, though overall levels remained high by historical standards.
Individual bad debts of pounds 5m and more accounted for pounds 210m and related to 17 customers, compared with pounds 600m and 27 customers in 1992, when there was a pounds 240m charge for one customer, Imry.
Mr Taylor said the UK bank was launching an investigation of customer complaints to see how to tackle them better. He divided them into mistakes by the bank, misunderstandings and behaviour of staff towards customers.
In France, the bank made bad debt provisions of pounds 106m, pounds 23m more than in 1992, as it continued to battle with property problems and loans to troubled middle-sized companies. There were also losses in Italy and Germany.