BARCLAYS could completely overhaul the way it remunerates its top staff next month.
Bob Diamond is considering paying a portion of bonus payments for his top 1,000 staff in contingent convertible bonds – known as Cocos.
Cocos are a more politically acceptable form of remuneration as they convert from debt to equity if a bank runs into trouble, therefore becoming relatively worthless, unlike debt which is likely to be repaid.
The bank told City A.M. no decisions have been made on bonuses yet. The bank will report its results on 15 February and bonuses will be announced after that.
Diamond will also announce a strategic review that will target underperforming parts of the business and could lead to significant job losses.
Meanwhile, an accord between the government and UK banks on lending and pay stalled again yesterday, with an agreement now not expected until next month.
The talks – dubbed project Merlin – aim to secure assurances that banks will lend almost £200bn to small businesses and pledge to be more transparent over pay. In exchange the government will offer to end “banker bashing” by ministers and guarantee there will be no further crackdown on bonuses.
However, banks are understood to be hesitant, with lending commitments likely to be agreed at far below the number being discussed.
Santander has already pulled out of the talks, instead opting to deal directly with the Treasury, and City A.M. understands Barclays is unhappy with tough new rules being proposed about disclosure of staff remuneration.
Banks are also understood to have clashed with the government about commitments to the so-called “Big Society Bank,” which would provide lending facilities to charities and voluntary organisations.
Cameron had hoped to secure lending of more than £1bn but is unlikely to achieve anywhere near this sum.