BARCLAYS had to hike bonuses to stop key US units disintegrating at the end of 2013, the bank’s chairman said at its annual general meeting yesterday.
Sir David Walker defended the 10 per cent rise in the bonus pool last year while profits fell, in the face of angry opposition from some shareholders.
The rise in bonuses was in part a reflection of the sharp fall in 2012 after the Libor scandal.
But Walker also said the bank has to pay the market rate to keep the best staff.
“It is not in the interests of shareholders if significant businesses are left to wither on the vine if we are unable to replace key staff,” Walker said.
He gave the example of the US bond desk where both co-heads and two-thirds of senior managers quit to go to rivals late last year.
As a result, Walker said pay had to go up to hire and retain quality replacements, if the bank wanted to continue servicing clients in those markets.
But Walker added that he does not expect the bonus pool to rise in the same circumstances again.
The specific reasons for that will be revealed on 8 May when Barclays announces investment bank reforms – changes which are expected to lead to thousands of staff in poorly performing units losing their jobs, thus cutting the bonus bill.