Page last updated at 14:45 GMT, Saturday, 23 January 2010

Barclays to defer bonuses for up to three years

Barclays logo
Barclays was not bailed out by the UK government during the financial crisis

Barclays is to defer paying bonuses earned this year to its directors and senior staff for up to three years.

The BBC understands the payments for last year have not been set, but when they are will be paid out mostly in shares in staggered form up to 2013.

Two days ago President Barack Obama proposed significant curbs on the size and scope of banks operating in the US.

Barclays did not receive any money directly from UK taxpayers during the financial crisis.

However it did sell a notable share of its business to the government of Abu Dhabi.

The bank will tell its 130,000 staff over the next few weeks that while they will be getting a bonus, almost all of it will be deferred over the next three years - and this will be the new ongoing policy.

Barclays will publish exactly what bonuses are to be allocated in March for senior executives.

Deferred bonuses are expected to be ongoing and built into staff pay deals rather than simply a one-off measure.

Public anger

In response to mounting public anger over enormous profits enjoyed barely a year after the near collapse of the entire banking system, Britain's third largest bank is going further than any rules imposed on it by either the UK government or the G20.

Joe Lynam, BBC Business correspondent
Joe Lynam, BBC business correspondent

This move by Barclays - whilst going further than FSA or G20 rules - may not go far enough to appease those who object to any bonuses being paid to bankers at all.

Eighteen months after being saved by taxpayers, many people find it obscene that banks should be making near record profits and bonus pay-outs - however long they are deferred for.

This pressure by voters will almost certainly mean that radical change to how banks operate is unavoidable - the opening salvo of which came when President Obama said last week that he was "ready for a fight" with banks.

President Obama announced plans to limit the size of banks and impose restrictions on risky trading on Thursday.

His proposals may mean that some of the biggest US banks have to be broken up.

They also include a ban on retail banks using their own money in investments - known as proprietary trading. Instead, banks would be limited to investing their customers' funds.

His plans led to a major sell-off in banking shares on Friday, with Barclays' shares sliding by four per cent.

Britain imposed a one-off super-tax on bankers' bonuses in the pre-Budget report in December 2009 and all UK-based banks will still have to pay the 50% windfall tax.

The tax applies to any individual discretionary bonus paid above £25,000 until April 2010, and was designed to discourage banks from awarding large bonuses.

Treasury officials told the BBC the decision made by Barclays to defer bonuses was "'in line with the commitments that banks [had] already made with regards to remuneration and pay" and "no bank would be around today without taxpayer support".

State-controlled bank RBS has already said none of its board members would receive their entire bonus this year and it too would be paid in staggered form up to 2013.

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