Antony Jenkins, chief executive of Barclays, which
is considering paying its top bankers a monthly
allowance to get around the EU bonus cap.
Photograph: Mark Lennihan/AP
Jill Treanor
Tags: Barclays, Banking reform , Antony Jenkins,
Banking, European Union
Barclays is working on ways to get around around
the European Union's cap on bonuses by handing
its top bankers new payments to top up perceived
shortfalls caused by politicians' attempts to clamp
down on escalating City rewards.
In proposals that were described as outrageous by
campaigners for pay reform, 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 restrictions are already subject to a legal
challenge by George Osborne.
Barclays, whose new boss, Antony Jenkins, has
pledged to clean up its culture after the Libor-
rigging scandal, is not alone among major banks in
sounding out investors about revamped pay
policies. But it is thought to be presenting more
detailed proposals than its UK rivals.
The new rules the banks are eager to avoid mean
bankers' annual bonuses cannot be greater than
their salary – or double their salary if
shareholders have given specific approval.
Barclays' current plan, reported by Sky News, is 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.
Barclays refused to comment but the bank is
risking an angry reaction from investors after
tapping them for a £6bn cash call last month. It
had been expected to be at the forefront of pay
reform after appointing the City lawyer Anthony
Salz, also a director of the Scott Trust, owner of the
Guardian, to review its culture. The bank has been
attempting to regain public confidence and is
participating in a meeting between company bosses
and religious leaders at a conference in London on
Thursday.
City regulators have feared that banks would look
for ways to get around the bonus cap, most likely
by handing out increases in basic salaries. Douglas
Flint, HSBC's chairman, admitted in August 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.
Last month Osborne launched a legal challenge to
the cap because, the chancellor claimed, it will
make the financial sector more risky by reducing
the impact of new rules, introduced since the
crisis, which allow bonuses to be clawed back.
Campaigners for City and pay reform were
concerned by the Barclays proposals. David
Hillman, a spokesman for the Robin Hood Tax
campaign, which lobbies for a tax on bank
transactions, said: "Despite protestations to the
contrary, it's clear that banks have still not curbed
their addiction to grotesque levels of pay. Having
brought down the global economy, accepting
reduced bonuses should be the least bankers do to
make amends.
"Rather than taking the EU bonus cap to court, the
UK government should be ensuring such excessive
wealth helps pay for the sector's past mistakes,"
Hillman said.
Shareholders are thought to be seeking more
information from the bank – which is accustomed
to showdowns over pay policies – about how any
additional payments would be devised and how
bankers would receive them. With the allowances
appearing to effectively push up the fixed element
of bankers' pay, shareholders may also expect
bonuses to be reduced.
Deborah Hargreaves, the director of the High Pay
Centre, said the proposal by Barclays was
"completely outrageous".
"After the Salz report came out Barclays said it was
going to be ethical on pay and link pay to the
performance of the group. This seems to go against
that. Salz also said the bank used money as the
only way of influencing staff," said Hargreaves, a
former business editor of the Guardian.
The cap applies to "code" staff – those regarded as
taking and monitoring risk. The UK has 1,300 code
staff and Barclays has nearly 400. However, the
European Banking Authority is consulting on rules
that 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.
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