Barclays set to cut staff’s pay

By Erikka Askeland
Published on Sunday 5 February 2012 00:00

BARCLAYS Bank is expected to curtail its bonus payouts and cut staff salaries after being stung by investor pressure led by the Association of British Insurers (ABI).

Rob Burgeman, divisional director of Brewin Dolphin, will be watching if Barclays decides to raise its dividend after the ABI called for it to “rebalance” the allocation of returns to employees and investors.

“What are they going to do with the dividend? That is a way of demonstrating that it is being run by the interest of shareholders and not just the people inside them,” said Burgeman. “The pressure from institutions from some signs of moderation are mounting.”

The bank is expected to announce a pay cut of up to 30 per cent for 24,000 employees at BarCap as it responds to public fury over bankers’ bonuses, while chief executive Bob Diamond’s bonus could be slashed from an estimated £10 million to between £2m and £3m. Earnings for middle and junior staff are also set to be cut.

Gary Greenwood, an analyst with Shore capital, believes that the cuts will be made to salaries and not just bonuses, which indicates the bank is attempting to cut costs due to a decline in performance at its investment banking arm.

Barclays is expected to report pre-tax profits of £4.96 billion for 2011, compared with £6.1bn the previous year, as BarCap was hit by volatile market conditions but also faced higher taxes, write-downs on Eurozone debt and increased wholesale funding costs.

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