Barclays and HSBC expected to announce big bonus packages

Two big banks, who avoided the government bail outs, to issue strong third-quarter statements

Mark Leftly
Sunday 08 November 2009 01:00 GMT

HSBC and Barclays are likely to hint at big bonus pots for their staff next week, as they are not restricted by government ownership.

The two banks will issue third quarter management statements in a big week for the banking sector. Royal Bank of Scotland, now majority owned by the Government, has been ordered to stop paying big bonuses, but HSBC and Barclays will suffer less criticism as they performed relatively strongly during the market collapse and did not require government support.

Oliver Gilvarry, the head of research at Dolmen Stockbrokers, said: "Strong performance will result in increased bonuses at Barclays." He added that although HSBC was usually "conservative" with bonuses, it would be in line with many of its peers.

RBS announced a third quarter loss of £1.5bnLast week, , while the Government in effect announced another bailout of the nationalised banks. The Chancellor, Alistair Darling, took the Government's stake in RBS to 84 per cent.

In a big week for the City, Terry's Chocolate Orange maker Kraft Foods is working on a hostile bid for Cadbury to be launched tomorrow ahead of the Takeover Panel's "put-up or shut-up" deadline. Kraft is likely to broadly stick to the same terms as its original £10.2bn offer but may sweeten the bid slightly. Although the Cadbury board believes this undervalues the company, no rival bid has emerged.

A leading City banker said: "We are all expecting Kraft to offer about 750p a share again [it was 745p before]. Why would Kraft want to bid against itself?"

The other big battle in the City is over the future of transport group National Express. The boardroom is currently divided, with the deputy chairman, Jorge Cosmen, and his family wanting to explore a merger with rival Stagecoach.

The Cosmen family, the group's biggest shareholder with an 18.5 per cent stake, were in talks with other investors last week to garner their support for the move. The National Express board has already rebuffed the approach and is now looking to raise cash through a rights issue worth about £350m. The Cosmens do support the rights issue as well, which would help pay off the group's debt mountain. It would also help the company with the covenants, or terms, of its loans, which could be breached by the end of the year.

National Express closed at 330p a share on Friday, up 4.3 per cent on the start of trading.

Meanwhile this week, supermarket chain Sainsbury will announce half-year results. Nomura Securities forecasts the retailer will unveil an underlying pre-tax profit of nearly £300m, up from £272m in the same period last year. Sainsbury shares closed at 331.5p, down 1 per cent on the start of trading on Friday.

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