Bank cuts bonuses as profits up 32%

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Banking giant Barclays said that it has reduced the bonuses paid to its staff, despite pre-tax profits rising by 32% to £6.1 billion in 2010

Banking giant Barclays said that it has reduced the bonuses paid to its staff, despite pre-tax profits rising by 32% to £6.1 billion in 2010.

It announced a new compensation system following its Project Merlin deal with the Government which will see it pay 7% less in performance awards than last year.

At its investment banking arm Barclays Capital, which saw pre-tax profits excluding own credit increase by 2% to £4.4 billion, the bonus pool will be 12% lower than last year.

Despite the reduction in the bonus pool, overall remuneration to staff increased 20% to £11.9 billion. Total performance-related pay, including bonuses which had been deferred from previous years, increased by 25% to £3.5 billion.

Barclays also announced a raft of new measures which will see senior staff bonuses deferred over three years and will only be paid if the bank meets its capital requirements under the Basel agreement.

The number of staff who will see 60% of their pay deferred has also been significantly expanded beyond the requirements of the FSA’s remuneration code, the company added.

Chief executive Bob Diamond is due to receive an expected package of more than £9 million in pay and bonuses but details are unlikely to be revealed until Barclays releases its annual report next month.

Barclays said its decision to reduce 2010 bonuses was influenced by its recent Project Merlin agreement with the Government which saw the big four banks agree to pay less in bonuses than last year and lend more to small businesses.

Mr Diamond said: “We are committed to demonstrating that we are both responsible in our compensation decisions and practices and that we take our regulatory obligations and UK Government commitments seriously. In particular, our overall performance awards in 2010 have been directly influenced by the commitments that we have made under Project Merlin.”

Len McCluskey, general secretary of the Unite union, said: “The Barclays decision to award these mammoth bonuses for their top bankers is shameful. These bonuses undermine any claim by the Government that there is fair pay in banking. Those at the top of the big banks are paid more then 100 times the pay of those workers at the lowest level.”

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