New boss to squeeze pay at Barclays

Incoming chairman Sir David Walker expected to take the axe to costs at investment bank
  • @TheIndyBusiness

Barclays' investment bankers are braced for an unprecedented pay squeeze as the City grandee Sir David Walker joins as chairman.

The bank is already considering reforms such as following HSBC's policy of rolling up bonuses in shares and only paying when bankers leave or retire. But Sir David, a former Morgan Stanley investment banker, could push Barclays into going further, having authored a report urging radical change to industry practices for the former prime minister Gordon Brown.

Shareholders are pressing for changes to Barclays' remuneration structure, which has been widely blamed for the Libor-fixing mess. It resulted in Barclays paying a record £290m in fines and the resignations of chief executive Bob Diamond, his number two Jerry del Missier, and chairman Marcus Agius.

Ian Gordon, the banking analyst with Investec, said: "As a vocal critic of excessive pay, we expect Sir David to be supportive of our view that more radical action can and should be taken to resize the cost base within Barclays Capital."

One shareholder said: "We have long said that we want to see a rebalancing of the way returns are shared between Barclays' employees and shareholders in investors' favour."

Sir David's review into the way banks are run suggested that the total pay of all bank employees earning more than £1m should be disclosed in annual reports in a series of bands. However, that idea was watered down and rules which come into force later this year demand that the earnings of just the eight top-paid senior executives, below board level, are disclosed.

In addition, concerns have been addressed about the way Barclays is run which may also be an issue for Sir David. The Independent on Sunday has been contacted by a number of former staff who have painted a picture of long hours, aggressive management, and a culture of fear. Anthony Salz, a former senior banker at Rothschild is conducting a review of Barclays' business practices.

David Buik, from City bookie Cantor Index, said of the appointment of Sir David: "The most important thing now is who is going to be the chief executive. It has to be someone outside the Barclays camp."

Bill Winters, the former JP Morgan number two who served on the independent commission into banking, remains the bookie's favourite for the role. But Mr Buik reported growing support for John Cryan, the ex UBS finance chief who is currently working for Temasek, the Singaporean sovereign wealth fund. Antony Jenkins, Barclays' head of retail, is the leading internal candidate.