Bankers flock to Barclays despite bonus crackdown

James Moore,Deputy Business Editor
Wednesday 10 November 2010 01:00

Barclays said yesterday it was having "no problems" in attracting top bankers to its investment banking arm despite Europe's crackdown on bonuses. The bank's hiring spree comes as other banks, including HSBC and Standard Chartered, have loudly bemoaned new rules on bonuses and threatened to quit Britain.

Barclays has so far set aside £1.6bn to cover bonuses for staff, largely at its investment bank Barclays Capital where the compensation ratio has hit 43 per cent. That comes despite a marked slowdown at the division, which has been the driving force behind the company's growth in recent years. When accounting treatments covering the value of Barclays' own debt are taken into account, BarCap actually lost £182m in the quarter although without these accounting quirks, the profits totalled £765m.

The reason for the high compensation ratio. however, was put down to the recruitment of 2,000 new bankers. Asked if the bonus rules were preventing his ability to hire Rich Ricci, co-chief executive, corporate and investment banking, said: "We have had no problems recruiting a bumper crop of talent. People join banks for a number of reasons. I think Barclays Capital is a great place to work."

Privately senior figures at Barclays have expressed irritation at the array of new rules covering how they can pay bonuses imposed by Europe. However, its more emollient public stance is markedly different to rivals such as HSBC, which last week renewed the threats to quit Britain as a result of the regulations being imposed.

Mr Ricci did, however, insist that regulators should take care to provide the bank with a "level playing field" against financial institutions based in other countries.

Many banks have been sharply critical of new rules imposed on European banks by the Committee of European Banking Supervisors, because they say they go beyond international agreements on how bankers should be paid and therefore imposed an unfair burden on the continent's finance houses against rivals when it comes to attracting staff.

However, Barclays appears to have had few problems drawing City talent to its banner. Asked how he could justify the bonus money Barclays is expected to lavish on those bankers, Chris Lucas, finance director, said the payments were a "function of the market operating".

Overall Barclays reported income, net of insurance claims, of £22.9bn, up 2 per cent for the first nine months. However, impairment charges fell sharply to £4.3bn from £6.2bn. Pre-tax profits grew 4 per cent to £4.3bn.

Barclays said it was growing its share of the mortgage market, although it declined to give details on its share of net new lending.

Outgoing chief executive John Varley, however, insisted that Barclays was playing its part in supporting the economic recovery in Britain. He said the company had advanced £35bn in loans to UK households and businesses so far this year, an increase of nearly a third when compared with last year. "We understand what is required of us to support private-sector led economic activity," said Mr Varley in the bank's trading statement. He is being replaced by Bob Diamond next year. The shares finished up 11.35p at 297p.

Lloyds under fire for more job cuts: The sacked would now fill a small football ground says union

Lloyds Banking Group got into the (un)seasonal spirit yesterday by announcing another 420 job losses, bringing the total axed since its disastrous merger with HBoS to 22,000.

The banking union Unite said that the people sacked by the group – whose senior directors all remained in place despite the bank going cap in hand to the Government for a £15bn bailout – would now almost fill a smaller Premiership football ground.

In total, 840 roles will be affected but relocation and redeployment will leave the number of redundancies at half that level. The majority of the cuts will hit the wholesale division and the Black Horse Personal Finance operation which is being closed to new business.

Unite national officer Cath Speight said in response to the announcement: "Craven Cottage [home of Fulham FC] could hold the 22,000 people from this state-supported bank who been left devastated by the weekly flow of job loss announcements.

"Unite is calling on the new CEO, António Horta-Osório, to make a firm commitment to all colleagues that his first priority will be job security when he joins the company in early 2011. Today more than 400 people face the reality of a future without employment as Lloyds Banking Group continues to throw increasing numbers of staff on to the scrap heap of the jobless." By contrast to Lloyds, Royal Bank of Scotland, which required an even bigger bailout but axed directors, has indicated that no major redundancy announcements were likely in the final quarter of the year at its recent third-quarter results announcement.

David Oldfield, chief operating officer, wholesale at Lloyds Banking Group, said the decision followed a review of the business and would not affect existing Black Horse customers.

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