Barclays has announced plans for up to 12,000 jobs to be cut in an effort to reduce costs. The move has attracted criticism however. At the same time, it was revealed that bonuses have been upped, leading many to suggest this should have been the priority source of cost savings instead of job cuts.
The bank currently employs approximately 140,000 staff. Between 10,000 and 12,000 of these are going to be cut as part of the current push to save costs. 7,000 of the jobs cut are within the UK. It is claimed that 820 of the lost jobs will be at senior management level, including 600 directors and 220 managing directors. About 400 of senior management-level cuts will affect staff from the bank’s investment wing.
It is claimed that around half of the staff who are being shed have already been told. These job cuts follow on from similar cuts last year, when 7,650 roles were cut.
It has, however, been announced that the total bonus pool for 2013 was £2.38 billion. This represents a rise on 2012′s bonus pool, which was £2.17 billion. This has caused some controversy, as many feel it is inappropriate for a bank to cut jobs in order to lower costs while at the same time increasing the money paid in bonuses.
According to Chief Executive Antony Jenkins, defending the situation; “At Barclays, we believe in paying for performance and paying competitively.” Jenkins voluntarily waived his own bonus.
The bank attracted criticism from the Institute of Directors. The organisation’s Director of Corporate Governance Roger Barker said: “In 2013, the bank paid out £859m in dividends compared to a staff bonus pool of £2.38bn. The question must be asked – for whom is this institution being run?”
Barker added “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. ”
According to Gareth Hunt, analyst from Canaccord Adams, the move puts the bank’s pay-to-income ratio noticeably above the average figure for the industry. The average for 2013 stands at 40.2%, compared to 43.2% for Barclays. This compares to 2012 when Barclays’ figure stood at 40%, and is far above the bank’s target which is in the mid-30s. Barclays maintains that they are still aiming for a figure in the mid-30s ultimately, but defends the decisions made in the short term.
Barclays insisted that the increase in the bonus pool was in shareholders’ interests in the long term.