Yesterday was Barclays’ AGM. As predicted, it was a heated affair. Investors complained about pay, protestors protested about tax havens and about Barclays-backed coal mines. There were people wearing Antony Jenkins masks outside the Royal Festival Hall, where the event took place. Jenkins himself agreed to visit a mountain-based mine, to pacify them.
Ultimately, however, Barclays’ compensation policy was approved – only 25% of the assembled investors voted against it. In defense of its decision to hike bonuses by 10% to £2.4bn in a year when profits fell by a third (and to pay a bonus pool 2.5 times larger than its dividend payment to shareholders), Barclays invoked the ‘death spiral’ it first mentioned back in March. Under the gravitational pull of this spiral, the bank claimed that when it paid staff less, it lost its best staff, making it less able to pay those who remained – ad infinitum. This time there was more detail, however: Barclays said rival banks tried to poach two thirds of its U.S. bond trading desk in early 2013, that the the co-heads of the US Treasuries business had both threatened to resign, and that rival U.S. banks had hiked pay by 10-15%. In other words, Barclays needed to pay-up, or its U.S. fixed income business would go under.
Does this really make sense, however? As blogger and banking commentator Louise Cooper points out, fixed income currencies and commodities (FICC) trading isn’t the healthiest area of banking at the moment. Some suggest it’s in secular decline. Before yesterday’s AGM, Barclays revealed that it had a terrible first quarter in fixed income sales and trading. Deutsche Bank is about to make hundreds of its own fixed income traders and salespeople redundant, and options for re-employment are limited. The world has changed. Did Barclays really need to pay its FICC staff handsomely to retain them? In current circumstances, would it have mattered had they left?
Barclays also justified its 2013 bonus increase by invoking its 2012 LIBOR fine. £800m was clawed back from 2012 bonuses as a result of the fine, said the bank. In 2013, only £100m were clawed back. All things being equal, and absent the effects of this penalty, the 2013 Barclays bonus pool actually fell by 18%. While this sounds fair, Cooper suggests it also sounds a bit strange: Barclays has been lambasted over its bonuses for weeks. Why, therefore, has it only invoked the LIBOR excuse at the last minute? It sounds like a handy excuse.
Separately, ambitious young bankers and ambitious young banking technologists are said by recruiters to be defecting to the likes of Facebook. However, City Am says there are disadvantages to working for the social networking company. For example, the hours are said to be overwhelming and the pressure intense. The office is said to be too cold. And there’s a generous allocation of free food along with a staff sweet shop. “It’s really, really easy to gain weight,” complain Facebook employees. Much the same as banking then.
“We are paying for Manchester United, but we are getting Colchester United,” one Barclays shareholder said. (DealBook)
Private equity firm KKR doubled the amount of carried interest available to pay staff last year compared to the year before. However, the future pot of carried interest has been halved. (DealBook)
Wisdom Tree Europe, an ETF business, plans to double its staff from 12 to 24. (Financial News)
Things have been lumpy over at Evercore and Greenhill. (The Tally)
44% of 753 fathers in finance said that the biggest challenge they faced as a working father was missing their children, compared with only 8% who singled out achieving their career ambitions. (Financial News)
Event driven hedge fund New Peak Capital Partners has hired Vicky Gardiner, a former saleswoman from Morgan Stanley. (Financial News)
From 2011 to 2013, Mercuria hired 570 people, including executives from investment banks such as Goldman Sachs and Barclays Plc. That boosted staff to 1,200 from about 10 in 2004. Right now, Mercuria is sifting through JPMorgan’s commodities professionals and deciding who it wants and who it doesn’t. (Bloomberg)
Stuart Gulliver, chief executive of HSBC, will receive allowances worth £32,000 a week during this year – on top of his £1.2m salary. (HSBC)
There will be a final ruling on the European transaction tax next week and it looks like Britain is heading for defeat. (Financial Times)