Barclays hikes bonuses amid warning on jobs and fall in profits

Bonuses for investment bankers rise to £1.6bn despite fall in profits and warning of up to 12,000 job cuts this year

Barclays stoked the row over City pay on Tuesday by announcing a 32% fall in profits but a rise of 10% in the bonus pool for its 140,000 staff around the world.

Antony Jenkins, promoted to run Barclays in the wake of the £290m fine for rigging Libor, defended the decision to increase bonus payouts as he warned that between 10,000 to 12,000 jobs would be cut this year as he races to cut costs. Some 820 senior roles are to go along with 7,000 jobs in the UK.

In a move that sparked the fury of the TUC, which accused the bank of "sticking two fingers up to hard-pressed families across Britain", the bank announced it was paying bonuses of £2.4bn – up from £2.2bn a year ago – across the bank. Within that, the investment bankers enjoyed bonuses of £1.6bn compared with £1.4bn a year ago, even though the investment banking side suffered a loss in the fourth quarter and its annual profits tumbled 37%. The bank as a whole saw its profits fall to £5.2bn from £7bn.

Labour seized upon the numbers to call for a reintroduction of the bonus tax which Cathy Jamieson, shadow financial secretary to the Treasury, said "could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits".

The profit figures, announced 24 hours earlier than scheduled, on Monday, because of a fears of a leak, showed that on a statutory basis – including accounting quirks and other one-off items – the profits rose to £2.9bn. This was also the year that the bank tapped shareholders for £5.8bn.

Jenkins admitted that he only discovered the theft of confidential customer files – 2,000 names, addresses, phone numbers, passport numbers and details of personal finances – which is now the subject of regulatory scrutiny, after being informed of the loss by the Mail of Sunday. Only 300 of the 2,000 individuals affected have been contacted by the bank.

Frances O'Grady, general secretary of the TUC, said: "Today Barclays has stuck two fingers up to hard-pressed families across Britain by announcing another multi-billion pound bonus pool". In reference to the EU's cap on bonuses to 100% of salary, O'Grady added: "But rather than tackle the damaging City bonus culture, the Chancellor has been to Brussels to defend their greed".

Jenkin justified the hike in bonuses – despite his pledge to show pay restraint and waiving his own £2.75m bonus – by insisting the bank needed to pay staff in a globally competitive environment. He also insisted the bank was acting within the "spirit and letter" of the law by paying monthly role-based allowanced to key staff who might otherwise take pay cuts as a result of the bonus cap.

"We employ people from Singapore to San Francisco. We compete in global markets for talent. If we are to act in the best interests of our shareholders, we have to make sure we have the best people in the firm," Jenkins said.

"At Barclays we believe in paying for performance and paying competitively. Ensuring that we have the right people in the right roles serving our customers and clients effectively in a highly competitive global environment is vital to our ability to generate sustainable shareholder returns," he said.

"After careful consideration, we determined that an increase of £210m over the prior year in the incentive pool was required in 2013 in order to build our franchise in the long term interests of shareholders."

Even though the bank tapped shareholders for £5.8bn of fresh funds last year under instruction from the Bank of England, the average bonus per staff member was £17,000 up from £15,600 while the average investment banker received £60,100 up from £54,500.

Jenkins, who has set out to make Barclays the "go to" bank, has forced every staff member to embark on ethics training and set out eight new goals against staff will be measured in the future. One of his targets is increasing the number of senior women from 21% to 26% by 2018.

Jenkins regularly describes the changes that technology will impose on the banking industry - he is thought to believe that as many as 40,000 roles could eventually go from the 140,000 workforce - and on Tuesday described a "one in a hundred year transformation" of the industry. Half of the 7,000 of the jobs being axed in the UK have already been announced and branches are eventually expected to close.

He insisted that bonuses were down from 2010 by 32%.

The bank is fighting a £50m fine from the Financial Conduct Authority for discloses it make during the time of a crucial funding raising in 2008 but said this process had now been stayed while the Serious Fraud Office investigated.

The dividend for the year is 6.5p, the same as last year. The shares were down 2% at 269p in early trading.

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Barclays blasted over 'catastrophic' theft of thousands of customer files

Barclays is under scrutiny by regulators and could face a hefty fine after thousands of confidential customer files were stolen in a data breach described as catastrophic by an adviser to the business secretary, Vince Cable.

The files, containing details on 2,000 individuals including their names, addresses, phone numbers, passport numbers, mortgages and levels of savings, were allegedly sold for use in boiler-room scams, in which vulnerable savers are snared into fraudulent investments.

"This is catastrophic, just awful," the Liberal Democrat MP Tessa Munt, who is parliamentary private secretary to Cable and has campaigned on mis-selling by banks, told the Guardian. "What protections have Barclays got in place? Are the police going to pursue this, are they going to prosecute, and is someone going to go to jail for this? They should do."

"We are learning not to trust our banks and that is a pretty sad thing. It is a culture of just make money in any way and that probably breeds a contempt among those who are bankers towards those they are meant to serve."

Barclays said it would be writing to the customers concerned. The bank, which claims not all of the individuals named in the files were its customers, has begun an immediate internal inquiry and reported the theft to the police and to regulators.

The Financial Conduct Authority (FCA), which can impose unlimited fines, and the information commissioner, who oversees data protection and can fine organisations up to £500,000, are looking into the matter.

"Barclays have contacted us and we will be working with them to understand exactly what has happened and what steps consumers may need to take," a spokeswoman for the FCA said.

"Consumers rightly presume their data is safe with their bank, and this should serve to remind all firms how important it is they have the correct procedures in place to ensure data is secure and used appropriately. We will continue to investigate the issue with Barclays over the coming days."

The security breach was first reported by the Mail on Sunday, which was approached by a whistleblower who claimed the files were just a sample from a haul of stolen data containing the details of 27,000 individuals. The whistleblower said he was prepared to give evidence to police, and claimed he was given the data to sell on by an unnamed firm of rogue brokers whom he worked with.

The memory stick he handed over also contained national insurance numbers, details on dependants and highly personal information on whether people had undergone surgery or were on medication. Those affected include doctors, scientists, business people, a musician and a cleaner.

They are believed to have been customers of the now defunct Barclays Financial Planning business, which was fined £7.7m in 2011 and ordered to pay up to £59m in compensation for mis-selling investment funds to more than 12,000 customers.

Like those Barclays customers affected by the mis-selling scandal, many of those whose names appear on the stolen files are elderly. The whistleblower said the information was used to scam about 1,000 people, who were persuaded to invest in rare earth metals that did not exist. Between December 2012 and September 2013, a select group of brokers at the firm concerned were given the files, which they used to cold call their victims.

These were customers who had originally sought financial advice from Barclays. As part of consultations with advisers, they filled out questionnaires about their savings, physical health and revealed their attitude to risk using psychometric tests.

"The data is a gold mine for traders because it is so incredibly detailed. It gets them inside the customer's head," said the whistleblower. He added: "This illegal trade is going on all the time in the City. I want to go public to stop it getting bigger."

He described a world in which scammers worked from so-called "spank shops", renting offices and peddling products that were either fraudulent or sold at inflated prices to unsuspecting, often elderly or inexperienced investors.

With interest rates at an all-time low since the banking collapse, people have been withdrawing their money from the comparative safety of savings accounts chasing higher returns on investments. Many of them are seen as soft targets for rogue brokers.

When investors of the firm concerned began to suspect they had been duped, the trading floor was shut. According to the whistleblower, computers were wiped, paperwork destroyed, and the desks cleaned with bleach to remove DNA traces. The whistleblower, a former commodities trader, was asked to sell on the data, which he said could fetch up to £50 a file from those operating boiler room scams.

Barclays said: "Our initial investigations suggest this is isolated to customers linked to our Barclays Financial Planning business, which we ceased operating as a service in 2011. Based on what we have seen, this appears to be data from 2008 or earlier.

"This appears to be criminal action and we will co-operate with the authorities on pursuing the perpetrator.

"We would like to reassure all of our customers that we have taken every practical measure to ensure that personal and financial details remain as safe and secure as possible."

The Information Commissioner's Office, which can fine organisations up to £500,000 for failing to protect private data, said in a statement: "It's crucial that people's personal information is properly looked after. We will be working with the Mail on Sunday this week to get further details of what has happened here, as well as working with the police."
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Standard Chartered: shock departure of finance director Richard Meddings

Standard Chartered stunned the City when it announced the departure of its longstanding finance director Richard Meddings – previously considered a candidate for chief executive – and embarked on sweeping changes to its operations around the world.

Chief executive Peter Sands announced plans to merge the wholesale and consumer divisions in an attempt to energise the emerging markets bank, which is suffering its first profits slump in a decade. The move is likely to lead to job cuts.

He was forced to insist "I'm not going anywhere" after the departures and promoted the current boss of the wholesale division – Mike Rees – to become his deputy. Chairman Sir John Peace also had no plans to leave, said Sands.

One of the highest paid bankers in the industry after receiving nearly £35m in the past four years, Rees was immediately seen as the heir apparent to Sands, appearing to have usurped Meddings, previously regarded as the natural successor.

Amid concerns about the bank's financial strength the shares fell to their lowest level since it paid £415m to settle money laundering allegations in the US just over a year ago, though they recovered some of their losses to end the day down 2% at £12.83 after Sands insisted the bank was comfortable with its capital position.

Sands and Meddings, who insisted the decision to go was his own and taken in the Christmas holidays, had been credited with steering the bank through the financial crisis relatively unscathed until 2012's money laundering scandal in the US.

"It was totally my decision to leave," said Meddings, often a candidate on lists drawn up for top jobs at rivals. "After 11 years on the board of this bank and seven years as finance director it seems a natural time to step away," he added.

The bank was facing questions about the decision to keep paying Meddings his £800,000 salary until next year, as well as a potential bonus, even though he will leave in June. The 55-year-old is also walking away with unvested shares currently worth about £8m but whose actual value will only be known when they pay out over the next three years. Meddings' pension pot is likely to reach £7m by the time his 12-month contract expires next year.

Meddings had been caught up in the money laundering scandal when remarks by an unnamed bank official to a US colleague – "You fucking Americans" – were said have come from him.

Also leaving is Singapore-based Steve Bertamini, head of the consumer division, whose role is "falling away" according to Sands. Bertamini was hired in 2008 and the last £900,000 instalment of his signing-on fee will be paid in May – two months after he leaves the board. He will have his relocation to the US paid for by the bank, receive his £600,000 salary until this time next year and take away with him unvested shares worth £6m at current market values, although that value is subject to change .

Sands described both departing executives as "outstanding leaders" and "good friends" who would be missed. He said neither was receiving any form of payoff.

Last year it emerged regulators had required Meddings to be stripped of responsibility for the risk functions at the bank and Sandy Chen, analyst at Cenkos, said: "FD Meddings' departure is key – his position had already begun to erode at the end of last year, with risk oversight transferred from him to Peter Sands." Chen said later his concerns had been allayed and he had been reassured that further management changes were not on the way and that the bank could generate enough capital. Sands – chief executive since November 2006 – sought to quash speculation about a boardroom rift. "We remain very comfortable with our capital position and have no plans [for a rights issue of new stock]. We have a unified board which is fully behind the strategy".

Meddings said he had not decided what to do next and quipped he might consider financial journalism.

One investor said: "It's not an ideal world having a finance director leaving without a replacement".

There was speculation that Naguib Kheraj, one-time Barclays finance director and a non-executive at Standard Chartered, might be a candidate while head of strategy Anna Marrs was also cited by some.

Rees' salary will rise to £975,000 pounds from £735,000 in April although his earnings potential fall by 40%.

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