Barclays opens door to bigger bonuses as it eyes investment bank rebound
Barclays shareholders have waved through a proposal paving the way for it to award bigger bonuses to its top UK bankers as the lender reiterated confidence in its dealmaking arm.
At the bank’s annual meeting in Glasgow on Thursday, 99.75 per cent of shareholders approved Barclays’ resolution to allow its remuneration committee to set a new cap on UK-based bankers’ bonuses if it considers it appropriate.
The news comes six months after UK financial regulators announced they would remove the requirement for banks to cap variable pay at 100 per cent of base salary for so-called “material risk-takers” (MRTs), or up to 200 per cent with shareholder approval.
The cap was introduced in 2014 by the EU as part of efforts to limit excessive risk-taking following the financial crisis.
As the UK’s only domestic lender with a global investment banking business, Barclays has a higher number of MRTs than rivals Lloyds and Natwest.
Barclays opted to keep the 2:1 ratio for its roughly 1,600 MRTs for last year given that “the new regulations were published close to the end of 2023”. Its remuneration committee will now consider the matter further for 2024 and beyond.
The bank has stressed that the move is not a guarantee it will raise the cap in future, saying it is meant to “align our remuneration approach for MRTs with the updated regulations”.
Bigger bonuses for Barclays’ investment bankers would bring it closer to the practices of its Wall Street rivals. Last year saw Barclays hand dozens of its bankers no bonus at all after its investment bank struggled with a global slump in dealmaking.
Its domestic peers are also paving the way for bigger payouts. HSBC shareholders overwhelmingly backed its proposal to scrap its current bonus cap for hundreds of top UK bankers.
Lloyds is seeking approval for a similar resolution to HSBC at its AGM on 16 May, although it has noted that the cap did not impact many of its employees. Natwest has increased its limit from one to two times an individual’s base salary.
Chief executive CS Venkatakrishnan, known as Venkat, reiterated his confidence in the historically controversial investment bank on Thursday.
“It is the leading markets and banking business headquartered outside the United States and has deep client relationships,” he said.
Barclays’ earnings have been dragged down by a weaker performance from the unit in recent times, with some investors arguing it is subscale compared to Wall Street and a volatile revenue stream that should be ditched entirely.
The bank is looking to diversify away from dealmaking as part of a wider restructuring announced in February. It has pledged to cut £700m in costs from the investment bank by 2026 and reduce the proportion of risk-weighted assets allocated to the business.
Venkat said the restructuring, aiming to save £2bn in costs and return £10bn to shareholders by 2026, would “rebalance the bank”.
Barclays’ shares have struggled in recent years but have soared 37 per cent so far in 2024, making it on of the best-returning stocks on the FTSE 100 this year. “This is early evidence that our plan for Barclays is earning support,” Venkat said.
Chair Nigel Higgins added that Barclays still had “more to do” to improve its returns and valuation. “If we deliver against our plan, the improvement in our performance should be recognised by the market, and our share price should upgrade accordingly,” he said.
Thursday’s feisty AGM was repeatedly interrupted by loud heckles from activists protesting violence in Gaza and Barclays’ record on fossil fuels, with several individuals removed by security.