Barclays chief executive Antony Jenkins has defended the bank's controversial decision to increase bonuses as “a wise investment” for the business as he announced the creation of a “bad bank”.
The huge unit will contain £115 billion of assets which Eric Bommensath — presently the co-head of Barclays investment bank — has been told to get down to £50 billion by the end of 2016.
Much of the assets will come from the fixed income operations that were core parts of the old Barclays Capital built into a powerhouse by former chief executive Bob Diamond.
Jenkins — who also announced today that 19,000 jobs will be cut at Barclays over the next three years — justified the move, saying “we live in different times now”.
However, he was unrepentant over the rise in bonuses which inspired a revolt among shareholders at a stormy AGM last month. He said it meant more top bankers are now sticking with Barclays after a series of raids by rivals doubled the rate of defections last year.
Jenkins further dismissed speculation that the departure of top deal-maker, Skip McGee, as head of Americas would lead to an exodus.
“What we have seen is that the money we have invested in paying higher bonuses is doing the job of protecting people within the investment bank at managing director level,” he said. “The decision we took last year has proved a wise investment. We have seen no change at all in attrition [since McGee’s departure was announced] which is lower than it was last year.”
Jenkins said the businesses in the “bad bank” — including fixed income instruments, currencies and commodities — no longer made sense. But he denied that the move had been prompted by regulators’ probes.