Top US banker quits Barclays as turmoil rages over bosses' pay

associate business Editor

Barclays was facing fresh turmoil last night as its top US investment banker quit as head of Americas after barely 18 months in the role.

The shock news of Hugh "Skip" McGee's departure was followed soon after by revelations that Barclays will next week be hiving a host of its banking operations into a so-called "bad bank".

The new non-core unit is reportedly set to include such declining operations as its trading of interest rate products, currencies and commodities, as well as loss-making branches in continental Europe.

The departure of Mr McGee, 54, comes amid continuing controversy over pay and bonuses at Barclays' American investment-banking division, built from the ashes of Lehman Brothers' US operations. They were bought out of bankruptcy by former chief executive Bob Diamond.

Mr McGee had been the most senior ex-Lehman banker at Barclays, and his departure sparked speculation that a rash of others could follow him out the door.

Officially, the bank said he was leaving because of the focus on regulation and compliance his job would entail as a result of US banking reforms. These require overseas banks operating in the US to establish an "intermediate holding company" containing all their subsidiaries by 1 July 2016.

Barclays said the role would as a result "require a great deal of management focus over the next two years on regulatory relations, compliance, and the very significant legal and operational ramifications associated with the creation of the new entity". This would not appear to play well with the skill set of Mr McGee, one of the bank's top deal makers who received nearly £9m in shares from bonus schemes this year, more than any other executive.

But the issue of pay has led to tensions at the business and former Lehman staff still working for Barclays have made no secret of their unhappiness with the scrutiny and focus on their earnings, despite the hefty pay rises many of them enjoyed through the bank's increased bonus pool.

Barclays' chief executive, Antony Jenkins, added fuel to the fire by warning that the bank would have faced a "death spiral" of bankers quitting for more money at rivals had it not hiked pay last year.

Mr McGee was seen as having played a key role in maintaining remuneration levels for his former Lehman colleagues.

The bad bank plan will be unveiled next week in a strategic update to investors. The moves are likely to involve heavy cuts and job losses and be implementated by the co-chief executives of its corporate and investment bank, Tom King and Eric Bommensath. Mr Bommensath will reportedly run the bad bank. There had been speculation the pair could be facing the axe given the unit's stuttering performance, but that proved wide of the mark. The bank said Mr McGee's replacement, Joe Gold, would report in to them. Mr Gold joined Barclays in 2002 from the collapsed energy trader Enron.

Doomsday scenario: Bank's strict test

The Bank of England laid out an "extreme" economic crisis scenario yesterday that banks must be in a position to withstand to pass the regulator's new stress test.

The Bank's Prudential Regulation Authority painted a hypothetical picture of GDP plummeting 3.5 per cent over the next year, house prices dropping 35 per cent and inflation soaring 6.5 per cent by the end of 2016.

Other elements of the dire picture include unemployment spiking to 12 per cent. The Bank's recession scenario also includes interest rates jumping from 0.5 per cent to 4 per cent.

Lenders that fail the stress tests will be directed to increase their capital levels.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory