Bar­clays CEO up for first bonus after two years

The Pak Banker - - COMPANIES/BOSS -

Bar­clays Plc's Antony Jenk­ins is poised to take his first bonus as chief ex­ec­u­tive of­fi­cer after elim­i­nat­ing thou­sands of jobs in the U.K. bank's most ag­gres­sive cost cuts to date.

Jenk­ins turned down his first two bonuses and could now re­ceive as much as 1.9 mil­lion pounds ($2.9 mil­lion), ac­cord­ing to the bank's an­nual re­port. The bank's re­mu­ner­a­tion com­mit­tee, led by non-ex­ec­u­tive John Sun­der­land, meets early next month to make the decision, said two peo­ple with knowl­edge of the mat­ter who asked not to be iden­ti­fied be­cause the mat­ter is pri­vate.

"As U.S. and Euro­pean firms are still pay­ing bonuses, it would prob­a­bly be a bit per­verse for Jenk­ins not to when pretty much all other bank CEOs are," Colin McLean, founder and CEO of SVM As­set Man­age­ment Ltd. in Ed­in­burgh, who over­sees more than $800 mil­lion, in­clud­ing Bar­clays shares. "He's got through the stress tests and the bank looks in good shape."

Jenk­ins, 53, an­nounced plans to cut 14,000 jobs last year and sold the bank's con­sumer bank­ing busi­nesses in Spain and the United Arab Emi­rates, help­ing to re­duce costs by 1.7 bil­lion pounds to re­vive prof­itabil­ity. Jenk­ins, whose bank passed a set of Euro­pean and Bri­tish stress tests last year, suc­ceeded Robert Di­a­mond in 2012 after Bri­tain's sec­ond-largest lender by as­sets was fined 290 mil­lion pounds for rig­ging Li­bor in­ter­est rates.

An­a­lysts ex­pect the lender to re­port full-year pre­tax profit of 5.6 bil­lion pounds from 5.2 bil­lion pounds a year ear­lier, ac­cord­ing to the av­er­age es­ti­mate of 22 an­a­lysts com­piled by Bloomberg. The bank is sched­uled to re­port earn­ings on March 3. The shares rose 0.9 per­cent to 244.5 pence at 10:11 a.m. in London. Last year they dropped 10 per­cent, the sec­ond-worst per­for­mance among U.K. lenders after Stan­dard Char­tered Plc.

Will Bowen, a spokesman for Bar­clays, de­clined to com­ment on ex­ec­u­tives' pay. Sun­der­land couldn't be reached by tele­phone. Jenk­ins opted to forgo his bonus in the past two years after the Li­bor scan­dal, a 5.8 bil­lion­pounds rights of­fer­ing, and probes into cur­rency mar­ket ma­nip­u­la­tion. He still re­ceived shares val­ued at as much as 4.4 mil­lion pounds as part of a long-term in­cen­tive plan last year, four times his 1.1 mil­lion-pound salary, and a 363,000pound pen­sion, ac­cord­ing to the bank's an­nual re­port.

The CEO's pack­age was amended for 2014, re­duc­ing his bonus to as much as 1.9 mil­lion pounds and his in­cen­tive plan to 2.9 mil­lion pounds, the re­port shows. The changes were made to ac­com­mo­date 950,000 pounds of role-based pay, a cash al­lowance in­tro­duced in re­sponse to a Euro­pean Union rule that lim­its bonuses to no more twice fixed salaries. The Euro­pean Bank­ing Au­thor­ity said in Oc­to­ber role-based pay­ments are dis­cre­tionary and there­fore breach bonus rules, and U.K. reg­u­la­tors have yet to re­spond. The au­guries are good from the U.S. JPMor­gan Chase & Co. (JPM) and Gold­man Sachs Group Inc. (GS) boosted the cash por­tion of their lead­ers' bonuses for the first time since 2010. JPMor­gan's board gave CEO Jamie Di­mon a $7.4 mil­lion cash re­ward -- his first since 2011 -- while keep­ing his to­tal pay for 2014 un­changed at $20 mil­lion. The cash com­po­nent of Gold­man Sachs CEO Lloyd C. Blank­fein's bonus was $7.33 mil­lion, about a third of the bonus in his $24 mil­lion pack­age.

The only mem­ber of tax­payer-owned Royal Bank of Scot­land Group Plc's ex­ec­u­tive com­mit­tee likely to get a bonus this year is Rory Cul­li­nan, who heads RBS's bad bank, a per­son with knowl­edge of the mat­ter said Jan. 14.

Jenk­ins's turn­around plan, known as Trans­form, is show­ing signs of work­ing. The bank passed Euro­pean and Bank of Eng­land stress tests last year and is set to meet a common eq­uity Tier 1 cap­i­tal tar­get, of 11 per­cent by 2016, a year ahead of sched­ule, the Fi­nan­cial Times re­ported in De­cem­ber. It's also re­duc­ing its lever­age, or as­sets in relation to cap­i­tal, "quicker than we an­tic­i­pated," Fi­nance Di­rec­tor Tushar Morzaria told an­a­lysts in Oc­to­ber. "The sig­nif­i­cant part of the trans­for­ma­tion of Bar­clays is al­ready un­der way and in some parts com- plete," Jenk­ins said Thurs­day in an in­ter­view on Bloomberg Tele­vi­sion at the World Eco­nomic Fo­rum in Davos, Switzer­land. The bank will "ac­cel­er­ate the ex­e­cu­tion of the strat­egy," he said.

Jenk­ins said the univer­sal bank­ing model of of­fer­ing all ser­vices to clients, is "dead." In­stead, all di­vi­sions of the bank must earn suf­fi­cient re­turns, he said. As part of this strat­egy, the bank tar­geted 7,000 jobs at its se­cu­ri­ties unit last year, about a quar­ter of the to­tal, and cre­ated a bad bank to dis­pose of 115 bil­lion pounds of as­sets in­clud­ing parts of its fixed in­come, cur­ren­cies and com­modi­ties de­riv­a­tives units.

Costs in the third quar­ter were the low­est in any three­month pe­riod over the past five years. To­tal ad­justed op­er­at­ing ex­penses fell to 4.3 bil­lion pounds from 4.4 bil­lion pounds a year ear­lier, the bank said in Oc­to­ber.

"The man­age­ment team, in­clud­ing Jenk­ins, will claim a bonus this year on the progress they've made on cost-cut­ting and re­struc­tur­ing," said Chi­ran­tan Barua, an an­a­lyst at San­ford C. Bern­stein & Co., who rates the stock mar­ket per­form. Bar­clays's in­vest­ment bank per­formed bet­ter than some peers. Third-quar­ter pre­tax profit in Bar­clays's in­vest­ment bank dropped 39 per­cent to 284 mil­lion pounds from a year ear­lier. RBS (RBS)'s cor­po­rate and in­sti­tu­tional unit, which houses most of the in­vest­ment-bank­ing unit, posted a loss of 557 mil­lion pounds.

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