Barclays ups bonus pool by 10pc in 2013
Having said yesterday that profit before tax fell by a third (32 per cent) over 2013 to £5.2bn, Barclays has announced this morning that it upped its bonus pool by 10 per cent to £2.4bn in 2013.
Bonuses for investment bankers rose 13 per cent to £1.57bn in the year.
Revenue at the investment bank fell nine per cent to £10.7bn, while income was £28.2bn.
The move to hike bonuses will likely anger shareholders, government and the public. Ishaq Siddiqi of ETX Capital has called the news worrying, as the bank side-steps addressing the loss-making investment banking unit.
Paying for talent
Chief executive Anthony Jenkins said this morning on Radio 4’s Today Programme that the bank is competing in global markets, paying for the best talent.
It's also upped the amount of income distributed as pay, bonuses and benefits within its investment bank – the compensation ratio – from 39.6 per cent to 43.2 per cent.
Barclays says the results are good, but added it’ll continue tightening its belt into 2014, particularly in the investment division.
UK retail and corporate banking did particularly well, with continued strong growth of Barclaycard over the year.
Job cuts
Jenkins announced that the bank, which has 140,000 staff, plans to cut 10-12,000 jobs globally this year, with 7,000 being shed in the UK.
220 managing directors and 600 directors will leave the bank over the next six months as part of cost-cutting.
Half of those affected have already been informed.
Five-year transformation
This is the first set of full-year results under Jenkins, who has laid out his plan to transform Barclays over the next five years into the Go-To bank for UK customers, promising investors they will see the results.
But Siddiqi thinks that the job cuts move will be less worrying to investors than Jenkins' "questionable strategy", which'll remain under scrutiny, weighing on the share price.
The chief executive did label 2013 as a year of “considerable change” for the bank, acknowledging that while it’s made “substantial progress”, it’s still got “some way to go”.
Profits have been impacted by the restructuring and de-risking activity we completed during the year. This included withdrawing from certain lines of business, investing to transform our operations and resolving legacy conduct and litigation issues. The cost of these actions suppressed statutory profits to £2.9bn in the year but was in the long term interest of our shareholders.
As part of the so-called Project Transform, the bank shelled out a £1.6bn charge to overhaul codes and practices over the year. Tushar Morzaria, finance director, commented:
Regulation remains a key variable and, while we have gained clarity in certain areas, there remain a number of outstandings which we will continue to anticipate as best we can in order to 'future proof' the bank.
Leverage ratio
Barclays' leverage ratio improved to just shy of three per cent at the end of the year, from 2.2 per cent at the end of June. It said it remains ahead of its schedule to achieve the leverage ratio expected by the Prudential Regulation Authority (PRA).
Share price reaction
Shares have fallen over two per cent this morning, as investors digest the results.
