Barclays slashes 2011 bonus pool as profits fall by 3%

Banking giant Barclays slashed the bonus pool for its investment banking arm by 32 per cent in 2011 to £1.5 billion amid mounting pressure over the controversial payouts.

The average bonus for staff at Barclays Capital was cut by 30 per cent to £64,000 as volatile market conditions saw the powerhouse division’s profits slide 32 per cent to just under £3bn.

Meanwhile, the group total bonus pool was down 25 per cent at £2.2bn with the average payout for a group employee down 21 per cent year on year to £15,200.

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Elsewhere, the bank, which reported pre-tax profits of £5.8bn for 2011, down 3 per cent on the previous year, said it had capped the cash part of bonuses for investment bankers at £65,000. This compares to £2,000 at the state-backed banks.

The results come after weeks of conflict over bankers’ bonuses, in which Royal Bank of Scotland chief Stephen Hester turned down his £963,000 bonus amid mounting pressure and Lloyds boss Antonio Horta-Osorio waived his own payout following a leave of absence.

Chief executive Bob Diamond refused to be drawn on questions about his own bonus, amid reports he could be in line to receive more than £11 million in payouts.

The results said that annual incentives for executive directors and the eight highest paid senior executive officers were down 48 per cent compared to 2010 on a like-for-like basis, though Diamond would not confirm how his own pay fitted into this decline.

Those hoping for a peek at Diamond’s pay packet will have to wait until the annual report is published in mid-March.

But addressing the wider issue of bonuses, he said: “We need to balance remaining competitive with being responsive to the public mood.”

He said the mood surrounding the industry was not positive but the private sector would only deliver much-needed growth to the wider economy with a “confident” banking sector.

Diamond hailed Barclay’s business lending record in 2011 as it beat the so-called “Project Merlin” targets drawn up between Britain’s top five banks and the UK government.

Barclays delivered £43.6bn of gross new lending to UK businesses, including £14.7bn to small and medium-sized enterprises, exceeding its Merlin target by 13 per cent.

“We really got on our horses to get businesses going,” Diamond said.

The improved lending figures came as the business revealed income growth in every division but investment arm BarCap.

The UK retail and business banking division, where customers increased by 3 per cent to 760,000, saw pre-tax profits increase 60 per cent to £1.4bn, when stripping out the impact of the £400m charge for compensation for mis-selling payment protection insurance.

The division saw the number of current accounts increase by 2 per cent to 11.9 million, savings accounts were up 5 per cent to 15.1 million, while mortgages increased 2 per cent to 930,000.