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Barclays bonuses up as profits fall

Banking giant Barclays revealed a 10% hike in its bonus pool to £2.4 billion for 2013 despite posting a 32% drop in underlying annual profits.

The group said its investment banking staff would share £1.6 billion in bonuses, up 13% on 2012, giving an average payout of £60,100 per employee in the division.

Chief executive Antony Jenkins said the bank is "in a better position than we have been for many years".

But yesterday it took the unusual step of announcing its full-year profits a day early, confirming that underlying profits fell to £5.2 billion in 2013, which was below consensus forecast in the City for around £5.4 billion.

The bumper staff payout comes in spite of another tough year for the group, in which it added £2 billion to its bill for customer mis-selling scandals in 2013 and tapped shareholders for £5.8 billion in a rights issue in the autumn.

Mr Jenkins defended the increase in the staff incentives, saying the group believes in "paying for performance and paying competitively".

The Barclays boss has already waived his entitlement to a bonus for 2013 worth up to £2.75 million, citing "very significant costs" suffered last year over a series of scandals and its cash-call on shareholders.

Its increase in bonuses for the group's 26,200 investment banking employees saw its ratio of compensation to income rise to 44% from 40% in 2012, although more than two-thirds of handouts are deferred.

But pre-tax profits in the division slumped 37% to £2.5 billion over the year.

Barclays said its overall underlying profit for the final three months of 2013 was significantly lower, plunging by £1.2 billion quarter on quarter to £191 million, after being dragged lower by factors including £331 million of previously announced litigation and regulation penalties.

It was also knocked by costs relating to its so-called Project Transform overhaul.

Mr Jenkins launched the review of culture and practices in the wake of the bank's £290 million Libor-rigging fine, which led to the resignation of former boss Bob Diamond.

Overall bottom line profits rose to £2.9 billion in 2013 from £797 million in 2012.

Mr Jenkins said paying for talented staff was in the "best interests" of shareholders.

He said: "The profits were down principally because we were taking a number of actions to reposition Barclays to become the go-to bank and we announced those actions a year ago.

"In terms of the compensation number, it is up 10% but at Barclays we have two principles around that number. The first is that we pay for performance and the second is that we pay competitively.

"We employ people from Singapore to San Francisco. We compete in global markets for talent. If we are to act in the best interests of our shareholders, we have to make sure we have the best people in the firm."

Barclays confirmed it was cutting 10,000 to 12,000 jobs this year out of its 140,000 strong workforce, of which 7,000 losses are expected in the UK.

The group added that around half of the these have already been announced to staff internally.

Barclays also said it would cut 820 senior manager roles, of which 220 are managing directors and 600 directors.

Around 400 of those senior job cuts are from the investment bank.

Unite union national officer Dominic Hook said: "Despite claims there would be no return to its old ways, Barclays is increasing bonus pools for those already paid unimaginably high salaries. At the same time, the bank continues to announce thousands of job losses for ordinary workers.

"There are big questions about how Barclays will maintain customer service standards as it cuts jobs and forces those workers that survive to be ever more productive.

"The culture change the bank promised will be less than skin deep if those at the top still hoover up obscene amounts of money while workers in call centres and branches struggle by on low wages and face the persistent pressure of job insecurity.

"The retail bank is performing well and workers will be angry that they are bearing the brunt of the cuts.

"Rather than reward the very few at the top and plan to cut thousands more jobs, Barclays should have used today to give a copper-bottomed guarantee that it will not close 400 branches across the UK - a quarter of its branch network."

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