Barclays draws criticism for plan to cut 12,000 jobs while raising bonuses
Pedestrians pass a branch of Barclays Bank, in London, April 24, 2013. THE CANADIAN PRESS/AP, Kirsty Wigglesworth
Danica Kirka, The Associated Press
Published Tuesday, February 11, 2014 11:36AM EST
Last Updated Tuesday, February 11, 2014 4:33PM EST
LONDON -- Barclays PLC faced widespread criticism Tuesday after the scandal-plagued bank announced plans to slash up to 12,000 jobs this year while also setting aside more money to pay bonuses.
The bonus pool rose by 210 million pounds ($345 million) in 2013 -- a move Chief Executive Antony Jenkins defended despite his mission to improve trust in the institution following a string of scandals including its involvement in the rigging of the Libor interbank lending rate.
"At Barclays, we believe in paying for performance and paying competitively," he said.
Despite his defence, there's been a lot of disquiet to the move by Britain's second biggest bank by assets, even among those who would usually offer their support.
Roger Barker, director of corporate governance at the Institute of Directors, was among those voicing concern over the increase in the bonus pool. In 2013, he noted that the bank paid out 859 million pounds in dividends compared to a staff bonus pool of 2.38 billion pounds.
"It cannot be right in any business for the executive bonus pool to be nearly three times bigger than the total dividend pay out to the company's owners," he said. "The question must be asked -- for whom is this institution being run?"
On the other side of the fence, there was a similar outcry. Dominic Hook, national officer for the union, Unite, attacked the bonus increase at a time of job cuts.
"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," Hook said.
The criticism over the bonuses may explain, at least partially, the sharp fall in the company's share price, which closed 3.8 per cent lower at 265 pence.
At the same time as it ramped up its bonus pool, the bank said between 10,000 and 12,000 jobs will go from a total workforce of 140,000. Around 400 of those jobs will go in the investment division, one of the targets of Jenkins' plan to transform the bank's reputation. The job cuts are part of a plan to reduce costs to 16.8 billion pounds by 2015.
The news over the job cuts came as the bank revealed that its net loss widened to 642 million pounds ($1.1 billion) in the fourth quarter, from 589 million pounds a year earlier. The results showed that operating expenses increased by 1.1 billion pounds during the period, including 468 million pounds for "Project Transform," Jenkins' flagship culture change effort.
Howard Wheeldon of Wheeldon Strategic Advisory Ltd said there are doubts as to the speed of the turnaround at the company.
"There's a lot of work to be done," he said.