Barclays preparing to pay bonus of at least £1m to new chief Antony Jenkins

http://www.guardian.co.uk/business/2013/jan/29/barclays-executive-pay-jenkins-libor

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Barclays is preparing to hand its chief executive Antony Jenkins a bonus of at least £1m for 2012 – a year when the bank was fined £290m for its part in the Libor-rigging scandal and set aside a further £1bn for mis-selling payment protection insurance.

The award of "a seven-figure sum" to Jenkins has been discussed with the bank's major shareholders by Sir John Sunderland, the head of the Barclays remuneration committee. He will face a grilling from MPs and peers on the banking standards commission over the bank's pay policies on Wednesday day.

The commission, set up by the government after the Barclays Libor fine, is calling witnesses on pay just as decisions are being made about the size of multimillion-pound pay awards for bankers at Barclays, HSBC and the bailed-out Royal Bank of Scotland and Lloyds Banking Group.

The scale of potential rewards prompted Chris Leslie, a shadow Treasury minister, to call for a repeat of Labour's bonus tax and urge the government to repeal the planned cut to the top rate of tax to 45% from 50% in April.

Campaigners from the Robin Hood tax campaign stepped up their calls for a tax on financial transactions, saying: "After an annus horribilis for Barclays, it's outrageous that its top bankers are still in line for lottery-sized pay packets."

Jenkins is on a possible annual pay deal of more than £8.5m after being promoted internally. His predecessor, Bob Diamond, was forced out after the Libor scandal.

Jenkins' maximum bonus could be 2.5 times his £1.1m-a-year salary (£2.75m) and the bank has been sounding out investors about his likely award for 2012. Last year investors rebelled against the pay deal awarded to Diamond, which included picking up his £5.7m tax bill in 2011, on top of his £17m share and pay package.

Sunderland, a former boss of Cadbury Schweppes and one-time president of the CBI employers' body, has not told shareholders the precise sum the bank is considering for Jenkins. Shareholders are not resisting bonus payouts as they want to support Jenkins as he attempts to change the culture of Barclays.

The bank refused to comment. Barclays is telling shareholders it will reduce its total bonus pool from the £2.2bn of 2011.

Unite national officer, Dominic Hook, said: "The gap between the highest-paid and the lowest-paid staff at Barclays is huge. It's shocking but true that the starting salary at Barclays is just £13,500 a year, making some workers at the bank eligible to claim tax credit."

Jenkins' pay did not need to be disclosed until he joined the bank's board five months ago but in 2011 he was identified as the fourth highest-paid executive at the bank with a £5.2m pay deal in 2010, before awards of shares paying out in the future.

Consumer groups also questioned bonuses for bankers in the light of the on-going scandal over PPI, which has cost the industry £12bn and rising. Barclays has set aside a total of £2bn to pay claims.

Richard Lloyd, executive director of the consumer body Which?, said: "Excessive bonuses shouldn't even be contemplated where there is evidence of mis-selling or rate-rigging, and past bonuses should be clawed back from those senior executives who have presided over wrongdoing."

New data released by the Financial Services Ombudsman showed the PPI scandal had led to 244,873 complaints in the last nine months compared with 157,716 in the whole of the previous 12-month period.

Jenkins has pledged to clean up Barclays and told staff this month to quit if they did not want to abide by his new values of respect, integrity, service, excellence and stewardship.

Lord Oakeshott, the Liberal Democrat peer, said Jenkins should take a lead "in not taking million-pound bonuses before you've proved Barclays really are putting respect, integrity, services, excellence and stewardship first. Three years would be soon enough."

The banking commission will also be hearing evidence from Alison Carnwath, non-executive director at Barclays, who presided over the pay award for Diamond and who quit amid speculation that she had wanted his payout last year to be withheld.

The commission is also taking evidence from John Thornton, the former Goldman Sachs banker who chairs the remuneration committee at HSBC, which paid a record £1.2bn fine to US regulators to settle allegations that it allowed terrorists to move money around the financial system. As a result, HSBC also faces pressure to restrict bonuses to its executives.

Stephen Hester, chief executive of RBS, has already waived any bonus after the IT meltdown last June, although the bank is facing scrutiny of its bonus pool for its investment bankers in the light of a potential £500m fine for rigging Libor, which is due to be announced in the coming days.

It is not yet known whether António Horta-Osório, the boss of Lloyds – which is 39%-owned by the taxpayer – will receive a bonus. Lloyds has been hardest hit by the PPI scandal, setting aside £5.3bn, but the offending policies were mis-sold before Horta-Osório arrived.