Barclays profits treble as it kills off its bad bank
PROFITS at Barclays have nearly trebled to £3.2bn as the bank prepares to draw a line under its post- crisis turnaround plan.
Barclays has been selling socalled non- core assets since narrowly avoiding a bailout in 2008 as the financial system teetered on the brink.
But yesterday chief executive Jes Staley said this process would end by the start of July.
Hargreaves Lansdown analyst Laith Khalaf said: ‘Good progress has been made in winding down the bad bank that has been holding the group back. However, once the bad bank is consigned to the history books, there will be nothing for management to hide behind if the core business is not delivering.’
Staley took home £4.2m for his first full year in office. This included a £1.2m base salary, £1.1m in rolebased pay designed to get round a European Union bonus cap, and £169,000 in benefits such as life insurance and a car allowance.
He also earned an annual bonus of £1.3m and pocketed pension contributions of £396,000.
Because he is still quite new to the post, the 60-year- old was not given anything under the firm’s long-term bonus scheme.
But when it starts to pay out in coming years, he will be able to earn up to £8.3m.
Across the bank, 11 staff – two more than in 2015 – earned more than £5m and a further 353 trousered at least £1m.
The lender’s 119,300 employees were handed bonuses totalling £1.5bn, around the same as the pre- vious year. This was double the £757m given out to shareholders in dividends, which the board cut to 3p per share from 6.5p in a bid to speed up the recovery process.
Staley said that he hoped higher dividend payments could be considered for 2018 if performance remained strong.
‘On the compensation side, we need to pay for performance and we need to pay competitively,’ he said. The rise in profits was partly driven by a fall in compensation and legal costs related to bad behaviour such as the PPI mis-selling scandal.
These charges dropped from £4.4bn to £1.4bn. However, this was partly offset by a rise in bad loans, which led to the bank – Britain’s biggest credit card provider – taking a £2.4bn hit, £611m higher than the previous year. Although Barclays is about to shut its non-core business, it is still facing a UK criminal investigation over alleged fraud during a fundraising in 2008.
Investigators have interviewed a string of senior executives, including former boss Bob Diamond, over claims of illicit payments made to Qatari investors before they pumped £2.4bn into the bank.
They are considering whether any individuals, as well as the lender itself, should be charged.
It is also being sued by glamorous financier Amanda Staveley over the same controversy.
She secured cash from investors in Abu Dhabi for the same fundraising and claims they were treated unfairly.
And the bank is locked in a courtroom battle with the US justice department over claims it mis-sold toxic mortgage debt. This scandal dates back to before the financial crisis, when lenders handed mortgages to US borrowers unable to ever pay them back. These toxic loans were bundled up, given top-flight credit ratings and sold to other banks.
When it became clear they were essentially worthless, the resulting shock nearly destroyed the financial system. Barclays has been unable to agree a settlement with the Department of Justice over its role in the debacle, and is now going to court.