Barclays has bulked up its half-year bonus pool for the first time in three years, raising bankers’ hopes of bigger annual payouts after the lender formally scrapped the EU bonus cap this month.
The bank put £675m towards its bonus pool in the first six months of 2024, according to Barclays filings. That is up from the £665m put aside for its staff bonus pot, which is made up of cash and shares, over the same period in 2023. That bonus pool will continue to be built up until the end of the year, with staff able to be paid up to 10 times their salary now that the EU cap has been set aside.
It is the first time that the amount put aside for bonuses by mid-year has increased since 2021, and suggests Barclays may be more generous to high-performing bankers when it makes final pay decisions by the end of February.
Payouts at Barclays and other banks had fallen in recent years as high inflation and interest rates suppressed activity in the City. Businesses delayed the corporate deals and fundraising that are the bread and butter of investment banking divisions, where staff receive some of the highest incentives.
However, business confidence and demand for investment banking services have started to bounce back, prompting recruiters and pay experts to predict a rebound in annual bonus payouts this year. While Barclays’ overall pre-tax profits fell 8% in the six months to June, its investment banking division managed to eke out a 2% rise in earnings, helping to offset flat and falling profits at its retail and corporate banking divisions respectively.
“Rewarding colleagues for their contribution to Barclays’ sustainable performance is a key part of our pay approach,” Barclays said. “At this stage of the year, the 2024 incentive pool has not yet been determined – that decision will be made once our performance in 2024 is known, and announced alongside full-year results in early 2025.”
This is also the first year in which Barclays’ big earners – chiefly its traders, dealmakers and compliance staff – will not be hemmed in by the banker bonus cap, an EU rule that regulators formally scrapped last November. The cap previously limited bonuses to two times bankers’ salaries, and was part of efforts to stamp out the kind of risky behaviour that was blamed for causing the 2008 financial crisis.
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Barclays became the first UK bank to officially lift the cap after shareholders gave the go-ahead at its AGM this spring. Staff were told they would now have the opportunity to earn up to 10 times their salary in bonuses. The bank has stressed that the decision to end the cap “does not alter the way Barclays sets its incentive pool, which is based on overall group performance”.
NatWest Group, another of the UK’s big four banks, said it had put £223m towards its bonus pool in the first half of the year. That figure, which includes annual and deferred bonuses, was up from £217m last year. HSBC said its bonus pool was $300m (£230m) higher than the same time last year, but did not provide the full figure. Lloyds did not disclose a half-year bonus change.
Questions have been raised over future payouts for the Barclays chief executive, CS Venkatakrishnan, and its finance director, Anna Cross, after an unnamed institutional investor reportedly called for a cut to the fixed-pay salaries to make up for the scrapped bonus cap. UK banks started to inflate the salaries of executives and high earners after the cap was introduced in 2014, to make up for their lost earnings potential.
While banks are unlikely to go through the process of changing the contracts of existing staff, Barclays’ executive pay policy will be up for review – and shareholder approval – in 2026.