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New round of bankers’ bonuses draws more anger

April 2014

Banks have drawn more criticism with their new round of large salary and bonus announcements.

Much of the anger results from Barclays’ revelation that the number of its staff on £1m ($1.66m, €1.2m) rose last year by more than 12% from 428 to 481. Half the recipients worked in the US and a quarter in the UK.

Those paid more than £5m rose from five to eight. They all worked outside the UK. One unidentified employee received a £3m pay-off.

Barclays was criticised earlier for swelling its investment bank bonus pool by £200m to £1.6bn despite a £37% slide in profits.

Chief executive Antony Jenkins himself, who refused his 2013 bonus, is nevertheless receiving shares worth £1m.
Jenkins gave the usual explanation that inducements were necessary to retain staff and business: “People are less attracted to come to you, both clients and employees. You get into something of a death spiral. Your brand deteriorates, and you can move very quickly from being a first-tier player to one in the second or third tier if you don’t protect the franchise.”

He reported that hundreds of key staff had already left Barclays’ US investment bank.

Lloyds Banking Group, 32.7% of which is government-owned, announced it paid 27 staff more than €1m ($1.39m, £836,000) last year.

Chief executive António Horta-Osório received a £1.7m bonus in addition to his £1m salary, and Juan Colombás, the head of risk, was paid £3.1m.

HSBC, the world’s largest bank in asset terms, revealed it paid more than €1m to 330 staff, and that 192 key staff received on average $1.5m (£903,000, €1.08m).

The pay and bonuses deal given to group chief executive Stuart Gulliver last year was £8m, up from £6.3m in 2012. Gulliver will also receive £1.7m in shares annually. The deal offered to chairman Douglas Flint could almost double his potential remuneration from £2.4m to £4.6m.

Emolument, the salary data specialist, has reported that the 2014 median bonus in UK investment bank trading divisions will be 52% higher than last year’s. The median bonus for directors was put at £200,000, compared with £106,000 last year.

Some bonuses, however, could be under threat. The Bank of England is consulting on proposals for clawing back bonuses in cases of misconduct or material error by individuals or a company’s financial downturn or risk management failure. The rules would be applied from 1 January, 2015.

The payments have upset even the Institute of Directors, which attacked Barclays for paying too much to senior staff and too little to shareholders.

The Trades Union Congress, the unions’ umbrella group, accused Barclays of “sticking two fingers” up to the public, and condemned HSBC for “soaraway boardroom greed”.

General secretary Frances O’Grady said: “It would be great if banks put the same effort into lending to small businesses as they do to getting round EU rules on boardroom bonuses.”

UK & NI Ireland | Executive pay


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