Barclays 'to pay staff £5bn'

Barclays is reportedly planning to pay its investment banks an estimated £5bn (€5.8bn) this year despite calls for restraint from Bank of England governor Mervyn King.

Barclays is reportedly planning to pay its investment banks an estimated £5bn (€5.8bn) this year despite calls for restraint from Bank of England governor Mervyn King.

Some 24,100 staff at Barclays Capital, the bank’s investment arm, are in line to receive an average £210,000, the Sunday Times said, which would include all salaries, bonuses and other benefits.

A £5bn pay pot would mark a 10% decrease on last year’s remuneration, but is still likely to provoke outrage from groups who have campaigned for a crackdown on City pay since the 2008 credit crunch forced taxpayers to bail out Royal Bank of Scotland, Lloyds Banking Group and Northern Rock.

King, in his role as chairman of England's Financial Policy Committee (FPC), last week recommended that banks consider limiting pay and dividends in order to maintain sufficiently high levels of capital to protect from potential future financial shocks, such as the collapse of the euro or a downgrade to the UK’s credit rating.

Elsewhere, the Independent on Sunday said RBS, which is 83% owned by the taxpayer, is expected to pay £500m in bonuses to its investment bankers, an amount which would be confirmed in February. This would be down on £950m paid out last year.

Barclays did not require a bailout in the wake of the financial crisis but its reputation as one of the top-paying banks has drawn criticism, with its chief executive Bob Diamond, who used to head up BarCap, once dubbed “the unacceptable face of banking” by Lord Mandelson, the former business secretary.

King said UK banks were in a better position than their continental peers to withstand future shocks but should still build up sufficient capital levels to protect from major events.

In its financial stability report, the FPC said UK banks’ exposure to government debts of the so-called vulnerable five – Greece, Portugal, Italy, Spain and Ireland – totalled £14.8bn.

Total exposure to the vulnerable five, including private sector debt, is £191.8bn.

The governor said banks should “limit distributions” – seen as a warning to banks to cut the amount they are preparing to pay in bonuses and dividends – in a signal a further crackdown on City pay was on the way.

Meanwhile, reports over the weekend suggested Eric Daniels, former chief executive at Lloyds, is preparing to resist having up to half of his £1.45m bonus clawed back by the lender.

Barclays and RBS were not immediately available for comment.

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