Barclays increases bonus payments despite 30% drop in profits

Barclays increases bonus payments despite 30% drop in profits

Barclays has paid its chief executive Jes Staley £4m and handed larger bonuses to its bankers despite a 30% drop in annual profits during the Covid crisis.

Pre-tax profits fell to £3.1bn for 2020 from £4.4bn a year earlier, with earnings hit by a jump in bad debt provisions. The bank put aside a total of £4.8bn to cover a potential surge in loan defaults linked to the coronavirus outbreak, slightly lower than the £5bn that analysts had expected.

However, the bank highlighted the strong performance of its investment bank, which performed better than expected thanks to a jump in trading due to market volatility last year. The division reported a 35% jump in pre-tax profits to £4bn for the whole of 2020, helping cushion the blow of the bad debt provision. 

The bank, which also published its annual report on Thursday, revealed it had paid Staley £4m for 2020, including an annual bonus worth £843,000.

Staley donated £392,000 of his income last year to the bank’s coronavirus fund, but did not waive his bonus like rivals at NatWest and Lloyds, leaving him with £3.6m.

That is down from £5.9m in 2019, when Staley was paid a £1.7m bonus.

Staley said he had not decided whether he would donate more of his salary given the ongoing crisis of Kovid, noting that the bank's senior leadership had "a really significant contribution to our compensation last year." Had given". "Let's see what this year brings," he said.

The overall bonus pool for Barclays bankers increased by 6% to £ 1.6bn by 2020. The Bank of England warned in December that it would closely monitor cash bonuses for senior employees, given the uncertain economic outlook.

Barclays is also restarting dividend payments, with plans to pay shareholders 1p per share for 2020 alongside a share buyback programme worth £700m. It is the first bank to do so, after the Bank of England lifted its temporary ban on shareholder distributions in December to allow limited payouts.

The regulator ordered UK lenders to scrap nearly £8bn in combined shareholder payouts at the start of the Covid crisis last March, to give banks a larger financial cushion to weather the economic downturn.

Commenting on the results, Staley said: “Barclays remains well capitalised, well provisioned for impairments, highly liquid, with a strong balance sheet, and competitive market positions across the group. We expect that our resilient and diversified business model will deliver a meaningful improvement in returns in 2021.”

Barclays shares fell 3.5% after the results were published, making the bank one of the biggest fallers on the FTSE 100 on Thursday morning.