Despite planned job cuts and a profit slump, Barclays bank has said that its bonus pool rose by 10% in 2013 to £2.38 billion, while bonuses within its investment banking arm increased by 13% over the same period.
The figures come as the bank plans to cut between 10,000 and 12,000 jobs this year, with 7,000 of these jobs to go in the UK. The job cuts are part of the bank’s bid to try and lower costs. It also follows data showing the bank’s pre-tax profit for the final quarter of 2013 was £191m, down 86% on the same period in 2012.
Barclays CEO Antony Jenkins, who waived his own bonus, defended the increase in the overall bonus pool to the Financial Times. He said, “We sometimes have to weigh difficult decisions but I’m confident the decision we have made on compensation is in the long-term interest of our shareholders.”
Despite the bank defending its actions, the increase in bonuses has resulted in criticisms.
Roger Barker, director of corporate governance at the Institute of Directors, commented, “It cannot be right in any business for the executive bonus pool to be nearly three times bigger than the total dividend pay out to the company’s owners. In 2013, the bank paid out £859m in dividends compared to a staff bonus pool of £2.38 billion. The question must be asked – for whom is this institution being run?”
He also urged shareholders, particularly large investment fund managers, to take a more aggressive role in the governance of the bank.
Frances O’Grady, general secretary of trade union TUC, also spoke out in response to the news, saying many people would find it hard to understand why a bank that has seen a drop in profits has decided to increase its bonus pool.
She said, “So while many at Barclays are today celebrating their bonus bonanza, hard-pressed families still experiencing financial pain of the recession – a recession caused in part by the reckless actions of the banks – will be struggling to make sense of it all.”