Bank bonuses will be thrust to the top of the agenda once more as banking giant Barclays kicks off the sector’s full year reporting season.
The group’s 2010 results will be scrutinised for details on how much it plans to hand out in this year’s bonus round following last week’s Project Merlin deal with the Government.
In his first set of results since taking on the top job, chief executive Bob Diamond is expected to say that underlying profits rose to £5.8 billion in 2010 from £4.5 billion the previous year.
But focus is likely to centre on pay after the UK’s four biggest banks signed an agreement with Chancellor George Osborne to pay less bonuses than last year and to increase lending to small businesses. Speculation suggests Barclays may fuel public anger just a week after the deal was struck.
It is understood the group will say that while individual bonuses at its investment banking arm Barclays Capital have been cut by as much as 10%, its overall compensation pool covering pay and incentives will have risen to about 40% of its revenues compared with 38% last year as salaries have risen.
It is also thought that measures used to account for deferred bonuses from 2009 and BarCap’s push into new areas of business will have inflated compensation.
Mr Diamond’s bonus package will also be firmly in the spotlight amid reports the former BarCap boss is in line for a handout of more than £9 million. However, details of his pay packet may not be disclosed until the company’s annual report is published next month. The group has remained tight-lipped about Mr Diamond’s rewards package so far.
He has waived his bonus for the past two years when he was in charge of BarCap, but recently told a Treasury Select Committee the period for “remorse and apology” for banks needed to be over. He said he would need to discuss whether to take any bonus this year with his family before reaching a decision.
He will also use his inaugural set of results since becoming chief executive on January 1 to update investors on a strategic review, with the bank thought likely to exit some of its international retail operations.
The 2010 figures are expected to show that BarCap – which makes up the bulk of its earnings – will report that profits were flat at £4.3 billion following a difficult final quarter of the year, but its other arms including the UK high street banking business are expected to show an improved performance.
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