Barclays chief lashes 'lunacy' over pay

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The Independent Online

Matthew Barrett, the harried chief executive of Barclays Bank, rallied the company's 55,000 employees to his defence yesterday by firing off a six-page letter justifying his pay package and branch closure scheme.

The letter, sent by block e-mail, was uncompromising in its promotion of Mr Barrett's branch-closure programme, which has attracted virulent criticism from the Government and from consumer groups for depriving rural customers of face-to-face banking services.

"The fact is that banks do not close branches, changing customer behaviour does," wrote Mr Barrett. "Despite the extraordinary hostility directed at Barclays in recent weeks, the decision to close the branches was, paradoxically, the socially responsible thing to do."

Mr Barrett justified the closure programme, saying that the cuts planned by Royal Bank of Scotland at NatWest made Barclays' proposals "look like a leisurely stroll on a picnic".

He was equally blunt on directors' pay and the recently introduced incentive share option plan (ISOP), dismissing its press coverage as "hype and lunacy". "For me to qualify for the kind of pay-out widely quoted on the front pages last week, our share price would have to rise to £180 in the next three years. Even I wouldn't have the arrogance to claim we could do that.

"The rationale behind ISOP is absolutely right. It contains a much greater risk of poor or no reward, and far more difficult targets than our previous schemes."

Mr Barrett said Barclays was not a government agency but an economic enterprise that delivered £649m to the public purse last year. He hinted it could in future slim its workforce further to keep up with new internet banks.

"Whatever we do, change will be unavoidably painful for some ... We will continue to take value-maximising decisions without sentimentality or excuses."

Mr Barrett apologised for his letter being "a bit long-winded" but said he wanted staff to know "what was rattling around in my head".

While he encouraged employees to share the letter with their friends and business contacts, none was willing to comment on its contents yesterday.

A Barclays spokeswoman said 200 staff had already replied to the letter. "It is our staff in the front line who have had to deal with customers complaining about his pay and this letter should help them answer those complaints," she said.