David Buik: Barclays bonus pot <i>is</i> justified

Barclays' mind-blowing profits were a total vindication of the board's policy over the last 18 months. Barclays has resisted capital from the Government; it has passed the Treasury's stress test, resulting in non-participation in the Government's Asset Protection Scheme. At the same time it has had some expensive capital injected, mainly from Qatar, but the alternative was unthinkable.

The purchase of Lehman Brothers in New York was inspirational. That move alone took significant competition off the street and attracted business that otherwise may not have gone Barclays' way.

But the ink was hardly dry on the audited accounts and the "Whingeing Willies" started droning again. Please get over it! We've moved on. The Government has got a humped back carrying the taxation on profits and bonuses all the way to the bank, having scooped in 50 per cent on much of the £2.5bn bonus pool, plus the corporation tax. The board has listened to the public dissatisfaction and has pandered to the anger by deferring some of the bonuses for a few years and by dropping significantly the amount paid in cash. In fact the top two – Varley and Diamond – have waived their bonuses. This largesse is spread amongst 23,000 employees and in the circumstances thoroughly deserved.

If the detractors keep moaning that loans are not finding their ways to customers, they need to understand why. After 11 months, we still have no regulation policy in terms of capital requirement and whether banks will be split into retail and investment banking units and on future tax levels. But the economy is too weak to consider breaking up the banks. Decent regulation is required, but so is a much-needed diversity of profitable businesses. Until further details are announced by the G20, banks will remain vigilant and will be reluctant to lend to those people who are less than certain to be able to repay. Barclays will likely have to raise new capital – maybe as much as £12bn. So making huge profits gives added options.

By the end of 2011, it is possible that Barclays Capital will contribute as much as 60 per cent of the bank's profits. Corporate banking is holding its head up and retail banking is under the cosh. So Barclays Capital's contribution will be fundamental going forward. To maintain those profits it is imperative to employ the correct people. They are expensive. Deal with it.

David Buik is a partner at BGC partners