Thursday, October 24, 2013

Barclay's the Banksters

Barclays, whose new boss, Antony Jenkins, has pledged to clean up its culture after the Libor-rigging scandal.  Barclays said it was going to be ethical on pay and link pay to the performance of the group. Alas, not true.  The bank has been discussing a scheme with its major investors about how it might sidestep the restrictions on bonus payments being imposed by the EU from January. The new rules mean bankers' annual bonuses cannot be greater than their salary – or double their salary if shareholders have given specific approval. The European Banking Authority would require the cap to be imposed on anyone earning over €500,000 (£425,000). At Barclays 1,338 of its bankers received more than £500,000 last year.

Barclays'  plan, reported by Sky News, to hand out a third payment to bankers in addition to the basic salary and traditional bonuses. The payment could take the form of a monthly allowance, paid in cash in addition to salary but not taken into account when bonuses are allocated.

 Other banks  looking for ways to get around the bonus cap admitted  that the bonus cap might result in pay rises.

Martin Wheatley, the chief executive of the Financial Conduct Authority, warned in May that the last time regulators attempted to restrict bonuses, shortly after the banking crisis, the pay of middle-ranking bank staff, known as vice-presidents, had gone up "by 100%". He said this was likely to repeated. Andrew Bailey, the head of the Prudential Regulation Authority, the City's new banking regulator, had calculated the new EU cap could push up banking salaries by £500m a year.

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