Barclays cuts back bankers' pay in bid to quell bonus fury

Bank which took no cash from taxpayer seeks to head off more rows over bonuses
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The Independent Online

Barclays is to slash the percentage of revenues it pays to its investment bankers to 38 per cent in a bid to calm tensions over bonuses.

But even at that level – down from 44 per cent last year – employees at its investment banking arm, Barclays Capital, will still share in a huge pay pool of £6.8bn, while Bob Diamond, who heads what is the company's most successful division, is set to take home some £20m.

Investment banks have typically paid out as much as 60 per cent of their revenues to staff in the past, leaving the remainder for ongoing business investment purposes and dividends for shareholders.

But several have cut back this year amid the continuing furore over pay. Barclays is expected to report pre-tax profits of £11.2bn on Tuesday when it becomes the first of Britain's "big four" banks to report full-year results. That is based on an average of City forecasts which vary wildly from as little as £9.4bn to as much as £12.8bn.

As the first bank to report, Barclays – which took no cash from the taxpayer during the financial crisis – has often found itself in the middle of a storm of controversy over profits and bonuses when it issues its results.

The cut in the ratio of revenues to pay is a sign that the company is trying to take some of the heat out of the debate over bankers' remuneration. Barclays has also signed up to G20 principles demanding more pay in shares and that a proportion of bonuses should be deferred and subject to clawback.

However, staff bonuses at Barclays Capital will still average more than £200,000. The pot enjoyed by Mr Diamond, pictured, comes largely from the shares he held in Barclays Global Investors, which was sold last year.

Barclays declined to comment on pay but its figures are set to be closely scrutinised by Royal Bank of Scotland, which has still to agree its bonus policy with UK Financial Investments, the body set up to manage the state's investment in the banking industry.

RBS is now expected to pay out between £1.3bn and £1.5bn in total bonuses; however, controversy is inevitable because RBS is 84 per cent owned by the taxpayer – in contrast to Barclays.

Barclays has previously taken its critics on at its results presentations, arguing that it is a substantial contributor to Britain's exchequer. However, its stance has been more emollient in recent months. John Varley, the bank's chief executive, told the Treasury Select Committee on Tuesday: "We should be able to say to taxpayers: "You should not have to do that [bail out banks] again'." But he insisted that there was "no correlation between a bank's size or shape and its propensity to fail".

Ian Gordon, a banking analyst at Exane-BNP Paribas, said he was expecting profits of £11.4bn from Barclays, but added that the figures would probably seen as something of a "sideshow" in the City where attention is focused on what the company says about its capital requirements.