Is Barclays paying its bankers too much?

February 16, 2010

A Barclays sign is seen outside a branch of Barclays bank, in central London in this file picture. REUTERS/Toby Melville

 

Barclays top-two — Chief Executive John Varley and President Bob Diamond — declined their 2009 bonus for the second year in a row, although the bank is paying the 23,000 staff at its investment bank £191,000 per head on average. The bank had a record year, but said all bonuses to its Executive Committee would be deferred, as it reacts to widespread criticism on bankers’ pay.

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5 comments

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This country needs successful bankers. If the bankers can earn more elsewhere, they will go elsewhere. RBS is dying, Barclays is thriving. The difference – bonus expectations.

I’d rather have UK banks making money and paying big bonuses (of which the Government takes more than half in tax and national insurance) a la Barclays than losing money and being propped up by my taxes a la RBS. Soon, the only investment bankers at RBS will be those who can’t get a job elsewhere. All the good ones will be at Barcap.

Posted by yatean | Report as abusive

Barclays, like all banks, becomes rich by using ordinary people’s money (like mine!). I’ve been banking at Barclays since 1962 and now I’m retired I’ve invested some money in their Investment area. This money halved during the recession, so my income from it has also halved. How come they’ve made so much profit but haven’t handed any of it on to investors like myself? Or to their shareholders? What’s the sense of rewarding high-earning staff with even more? Diamond and Varley are soooo rich they can afford, for publicity, to forgo their bonuses for a second year. I can hardly afford to heat my home, meanwhile. I’ve been loyal to Barclays for all that time, and I’m still being treated shabbily.

Posted by frangkox | Report as abusive

Bad bankers and good bankers destroy wealth instead of creating it – as Paul Volcker so succinctly pointed out (but what would he know?)

They suck in talent not only from other banks, but – more importantly – also from socially and economically useful activities.

Britain would be better off using its talents creating successful industrialists than successful arbitrageurs. It is unfair that we should constantly bear the burden of being Europe’s financial capital, it should rotate amongst the member nations like the presidency. Germany is getting a practically free ride.

If we don’t learn from manufacturing, we can learn from animal husbandry – livestock with parasites does comparatively badly.

Posted by UKplc | Report as abusive

The UK (as all countries do) needs successful profit making businesses to generate wealth and employment. Too many inept commentators, including Vince Cable have asked that banks resume low margin lending – Have politicians learnt nothing or do they simply wish to postpone the “crisis” until after the next election? I for one hope that real lessons have been learnt and that the myopic short term responses both to strategy, employment and competitor actions becomes an unacceptable trait and that future objectives focus upon the longer and socially more supportive generation of jobs, taxes, profits and yes bonuses for successful, above target performance.

I found Gordon Brown’s ill-conceived proposal that RBS bonuses be given to all staff regardless of performance offensive.

Staff receive a salary for BAU and paying bonuses just for turning up is a bad strategy which aims low and misses. Personally I want and need any potential business partner to be profitable – I need to be sure that they can continue to service my car, boiler, deliver food, educate my children and look after me in my old age. In order to achieve that objective my suppliers must be competent and importantly profitable businesses. Where the do pensioners think their monthly check comes from? –Certainly not from years of misspent National Insurance contributions!

As a long time bank shareholder the market developments have affected me badly, especially as a Northern Rock shareholder this was an expensive mistake and cost me dearly. I feel strongly that notwithstanding shareholder pain some depositors should also have lost money. Depositors in the UK have a long greedy history of funding badly run banks (BCCI, Northern Rock et al) and whilst Government now funds every bad bank with our money, depositors will continue to follow yields without any responsibility for the risk. In stark contrast the US decision to allow Lehman Bros to fail was a tough and very brave decision, but the right one. It ultimately sent the right message to markets, depositors and to shareholders that bad banks can and will fail. This lesson must be learnt and adopted in the UK before it is too late.

Posted by Clive.Laband | Report as abusive

The US decision to allow Lehman Bros to fail was a brave decision, but the message that markets (rightly) took from the aftermath was they won’t ever risk that again. Governments after that shored up banks or pushed them into shotgun marriages (resulting even fewer players) regardless of moral hazard.
Obama is right, the only way to stop them from being too big to fail is to make them smaller, arguments about consequent inefficiency are transparent balderdash – their margins are a direct representation of the difference between what they buy at and what they sell at.
If the supermarkets ran a cartel resulting in huge margins and gave all of it to their employees (but not shareholders) would the City describe them as efficiently run companies?
You simply can’t get past the fundamental truth that the banks create no wealth, they merely rearrange it.
And when you get the pension that Clive Laband refers to, don’t forget that the City has efficiently helped itself to more than a third of it before you retire, then efficiently sets about ripping you off with your annuity.
So we need successful profit making businesses to generate wealth and employment in wealth creation enterprises, but we need to shrink the banks back to be being about ten boring utilities funnelling cash from depositors to lenders. If that leads to low margin lending that’s a burden we’ll all have to share.

Posted by UKplc | Report as abusive