Barclays' president, Bob Diamond, yesterday rounded on the bank's critics for focusing on bonuses when the company reported record profits of £11.6bn.
Speaking at the bank's results presentation, Mr Diamond said: "These are remarkable results and they are customer-driven. This is business we are doing with clients across the world. When you look at Barclays Capital I would think you should be immensely proud that it is now the number one investment bank for fixed income not just in Europe but in the US."
Mr Diamond said questions about pay had "an edge to them". He and Barclays' chief executive, John Varley, have waived their bonuses for a second year running. Other executives will have their entire bonuses deferred and paid over three years. However, the bank has still put together a £2.7bn bonus pot, much of which will go to the 23,000 people who work at Barclays Capital, and of that just £1.2bn will be deferred.
Investment bankers' pay and bonuses will mean the average package comes in at more than £190,000 at BarCap, although some will earn much more than that, and the average income they generated was over £500,000. Barclays insisted that it was "in full compliance" with recent guidelines on how bankers should be paid to prevent a repeat of the wild risk-taking by some banks that many blame for the financial crisis and deep subsequent recession. The bank expects to pay £225m as a result of the Chancellor's " one-off" 50 per cent levy on bonuses of over £25,000.
Overall, Barclays reported record income of £31bn, up 34 per cent on 2008, although some of the sparkle was taken off that by a sharp rise in impairment charges, which reached £8.1bn, up 49 per cent. However, impairments fell in the second half of the year, and Barclays expects the situation to show further "modest" improvement this year. But there were no really serious "single company" losses facing Barclays in 2009, and this might not be repeated.
The headline profit number was also flattered by a huge one-off gain on the sale of Barclays Global Investors to BlackRock, the US fund management group. Without that, pre-tax profits would have come in down 13 per cent at £5.3bn. Barclays also said that while it was planning to continue to build its capital base, it will operate a "progressive dividend policy" from this year's 2.5p, down from 11.5p last year.
Despite the continuing storm over bonuses, Barclays Capital was again the star performer, generating £17.9bn of total income, and profits of £2.46bn, after absorbing £1.8bn of losses on Barclays' own debt.
However, Barclays' retail banking operations were also profitable – although earnings fell, with the UK generating earnings of £212m, down 55 per cent – despite recent reports suggesting that retail banks overall will barely make money this year, thanks to low interest rates and regulatory issues. The bank said it had made £35bn available for lending, against £11bn promised.
Regulatory issues generally were highlighted by Mr Varley as "the biggest risk" facing Barclays, and both he and Mr Diamond again repeated their view that big, universal banks were less risky than smaller "narrow banks".
Mr Diamond said: "I was at a conference with five ceos of America's biggest companies. They were clear that they want big, global banks and they need big global banks for their businesses."
Responding to questions about tax Mr Varley refused to criticise measures such as the new 50 per cent top rate which City critics say will lead to an exodus of top talent from London. However, Mr Varley said: "The UK has become an uncertain tax environment."Reuse content