Barclays has maintained a 100% cap on banker bonuses, even after the UK government scrapped the limit in October as banks in the City struggle to overhaul their pay practices.
The UK lender kept its 2:1 cap on bonuses for 2023, according to a letter to shareholders from its chair Nigel Higgins, and has yet to make a decision on changes for 2024.
Barclays remuneration committee would “consider this further in respect of 2024 and future years”, Higgins wrote.
“Whether or not the company changes the cap in the future, pay across the group will continue to be managed in line with Barclays’ remuneration philosophy, which includes a focus on rewarding sustainable performance,” he wrote.
Bloomberg first reported Barclays’ remuneration decision.
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The UK government pushed through plans to scrap the cap on banker bonuses, which limits payouts to 100% of salary or twice base pay if shareholders approve, in October. The proposal had been outlined in a disastrous mini-budget from former prime minister Liz Truss’s short-lived government and was the only scheme to survive the change of leadership.
It is aimed at bolstering the appeal of the City of London after Brexit and will bring compensation in line with practices in other major financial centres such as New York.
Put in place in 2014, the cap was introduced by the European Union to limit unnecessary risk-taking, but it has done little to rein in banker pay. Instead of lavish bonuses, banks instead introduced so-called role-based allowances, which are paid monthly on top of salaries to senior bankers and are not performance-based.
Banks have been slow to unwind these, with US firms including Goldman Sachs, JPMorgan and Morgan Stanley considering scrapping allowances last year. However, banks have yet to take a final decision on this as none want to be the outlier from the competition, compensation experts told Financial News.
Barclays’ limits on bonuses follow a difficult round for dealmakers in which more people have been handed zero payouts and pools have been skewed towards high-performers. The UK lender paid so-called doughnut bonuses to an increasing number of bankers this year.
However, Barclays maintained bonus payments for its material risk-takers working within its investment bank at £642,100 ($810,600), which was in line with a year earlier.
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