Barclays scraps executive bonuses

Barclays' cash machines

Barclays has seemingly defied the economic turmoil and posted profits of £6.08 billion for 2008.

The bank, which at the end of last year refused the government's bail-out money and instead secured new funding from the Middle East, managed to maintain profits last year despite having seen the amount of toxic debt on its balance sheet nearly double to £5.4 billion.

However, the £6.04 billion it has posted in profit is still 14% down from 2007. In light of this fall in profits, Barclays says it is scrapping bonuses for executive staff.

On the retail side - including current and savings accounts as well as mortgages - Barclays saw its profits jump 7% to £1.37 billion. The bank now boosts 11.7 million current accounts, 12 million savings accounts and 816,000 mortgage borrowers.

The latter figure is up from 754,000 at the end of 2007. In fact, Barclays says its share of the mortgage market is now 36%. This compares with a market share of around 6% at the end of 2007, according to figures from the Council of Mortgage Lenders.

Excluding buy-to-let loans, Barclays says its average mortgage is now around 47% of a property's value, up from 40% in 2007.


In light of the 14% fall in profits, Barclays has agreed to waive bonuses for executive directors and scrap its dividend for shareholders. The move comes after criticism from investors who were angry at the idea that some bankers could be rewarded for contributing to the problems currently enveloping the bank.

Barclays says staff below board level will still be in line for payouts although with a bonus pot of £600 million these will be "significantly lower" than in 2007. Executive directors will receive no bonuses for 2008, and the bank is now reviewing its compensation policies and practices to ensure "they evolve appropriately".

John Varley, chief executive at Barclays, says: "2009 will be another tough year. In 2008 we've had a crisis in the banking system - the principal issue for 2009 is going to be rapid economic slowdown, in a sense more a familiar but nonetheless pretty brutal slowdown in economic growth all around the world."

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