BARCLAYS is preparing to give a boost to the banking industry tomorrow, when it is expected to kick off the UK bank reporting season by announcing a bumper £11.2bn profit haul.
The figure includes a £6.2bn one-off profit on the sale of its asset management arm Barclays Global Investors to BlackRock last year – a deal expected to net Bob Diamond, the chief executive of the Barclays Capital investment banking division, a windfall of around £20m.
The bank, which is also expected to report strong results in investment and retail banking, is likely to set aside up to £4.5bn in total for staff compensation. But the payouts will represent a significantly lower proportion of revenues than in previous years, as Barclays follows its peers in cutting its investment banking compensation ratio to just 38 per cent, from 44 per cent last year.
The move comes after other global investment banks slashed their compensation ratios as a gesture to ward off populist anger over hefty payouts. Goldman Sachs last month announced it had cut the amount of revenues it paid out to staff to 36 per cent, a world away from the 49 per cent it awarded for 2008, while Credit Suisse last week announced a historically low pay ratio of 41 per cent for the 2009 financial year.
Royal Bank of Scotland, which is now 84 per cent-owned by the taxpayer, is also thought likely to use a depleted ratio of under 30 per cent to stave off criticism when it reports later this month.
Barclays’ top executives have agreed to defer 100 per cent of their bonuses for three years, while other senior staff will be subjected to a deferral of 60 per cent of payouts, in line with G20 compensation guidelines.