Barclays bank hikes profit, cuts bonuses

February 15, 2011
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, LONDON, Feb 15, 2011 – British bank Barclays on Tuesday said its 2010 net profit rose a third to over £3.5 billion and announced it had cut bonuses following a government-brokered deal to clamp down on excessive pay.

Barclays said net earnings jumped 36 percent to £3.56 billion (4.24 billion euros, $5.8 billion) from £2.63 billion in 2009, as write-downs shrank and it almost doubled profits at its investment arm.

It said it was paying £3.4 billion in staff bonuses, down 7.0 percent compared with 2009.

Pre-tax profit was also up a third in 2010 to £6.0 billion.

"Barclays delivered a significant increase in profit … despite continued economic challenges in our principal markets: historically low interest rates; sluggish volumes in many market segments; and considerable regulatory uncertainty," said the bank\’s new chief executive Bob Diamond.

"In light of those circumstances, I am proud of what my colleagues have achieved," he said in the earnings statement.

Barclays\’ share price rose to the top of the FTSE 100 leaderboard in early trade, gaining 2.0 percent to 317 pence. London\’s benchmark FTSE 100 index was down 0.14 percent at 6,051.62 points.

"Barclays has opened the bank reporting season in some style, exceeding analyst estimates despite a challenging 2010," said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

"The sporadic trading difficulties in the core Barclays Capital (investment) unit had been flagged at the third quarter update in November, although the fourth quarter performance was rather more resilient.

"Of equal note was the significant decrease in writedowns, which will be a theme as the season unfolds over the next few weeks."

Barclays is the first of Britain\’s major banks to report annual earnings, with HSBC and state-rescued Royal Bank of Scotland and bailed-out Lloyds Banking Group set to unveil their results over the next two weeks.

Amid public anger over bankers\’ high pay and a fragile economic recovery in Britain, the coalition government last week struck a deal with all of the country\’s major lenders on bonus pay and overall lending.

Finance minister George Osborne said total bonuses paid to British-based staff of the biggest banks would be lower than last year as part of Project Merlin, brokered after weeks of talks with the Conservative-led coalition.

Explaining the cut in Barclays\’ bonus pot, 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 for 2010 have been directly influenced by the commitments that we have made under Project Merlin."

American Diamond, who became chief executive last month after replacing John Varley, is infamous in Britain for pocketing huge bonuses as head of Barclays\’ highly successful investment banking division.

As boss of Barclays Capital, Diamond had been at the forefront of Barclays\’ transformation from a well-run retail bank into an investment banking giant able to compete with Wall Street titans.

Barclays Capital reported pre-tax profits of £4.78 billion last year, up 94 percent compared with 2009.

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