Investors slam Barclays over bonuses
And what are they going to achieve now?
They gave the the power to decide about bonuses. They should have thought about that when they were deciding about that. Thinking that incomes from share will be always good is like thinking that you will always win in trading. Now when the income from shares is not good, only now they are noticing that banksters are stealing with both hands?
RBS plan for 200% bonuses blocked by Treasury body
Royal Bank of Scotland has abandoned attempts to pay bonuses twice the size of salaries after being told the move would not be approved.
UKFI, the body that manages the Treasury's 81% stake in the bank, told RBS it would veto plans for a 2:1 bonus ratio at the next shareholder meeting.
"There will be no rise" while RBS is "still in recovery", the Treasury said.
New EU rules mean the bank has to ask its shareholders for approval of annual bonuses above 100% of base salaries.
"The new team at RBS have done a huge amount to repair what went so badly wrong in that bank, but there's still a long way to go," chancellor George Osborne told the BBC.
"We made it clear that in the circumstances it was not right to increase the bonus cap. I'm glad that RBS have agreed with that," Mr Osborne added.
In a statement, the bank said it had wanted to match its competitors by offering bonuses of up to 200% of fixed pay, but UKFI informed RBS that it would vote against any attempt to do so.
RBS's board said it "acknowledges that this outcome creates a commercial and prudential risk which it must try to mitigate within the framework of a 1:1 fixed to variable compensation ratio".
The bank would need 66% of shareholders to vote in favour of raising the bonus cap above 100%.
Bonus ceiling
The BBC has learned that UKFI initially approached the Treasury to approve a raised 2:1 ceiling for bonuses compared with base salaries for RBS, but that the Treasury decided to cap bonuses at 1:1.
Mr Osborne told the BBC that there was no ministerial pressure put on UKFI, and that the Treasury had worked as a team with the organisation.
RBS is the only major UK bank that has so far been denied 200% bonuses by its shareholders.
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Barclays executives were blasted by shareholders Thursday for paying bigger bonuses last year, despite the bank's weak earnings.
Shareholders large and small lined up at Barclays' annual meeting to accuse the company of putting the interests of its investment bankers ahead of its owners.
A third of the bank's shareholders withheld their support for the board's executive pay plan for 2013, with nearly a quarter of those who voted choosing to oppose the board. Leading the rebellion was Standard Life Investments, which holds a 2% stake.
"We are unconvinced that the ... 2013 bonus pool was in the best interests of shareholders, particularly when we consider how the bank's profits are divided amongst employees, shareholders and ongoing investment in the business," said Standard Life director Alison Kennedy.
Barclays (BCS) shares have fallen nearly 8% so far this year, whereas London's FTSE 100 index has only declined 1%.
Barclays CEO Antony Jenkins, who took over in 2012 after Bob Diamond was forced out in the wake of the Libor scandal, has promised big changes in culture and behavior.
Jenkins launched a major overhaul more than a year ago to repair the bank's finances, withdrawing from some businesses while trying to restore its reputation.
Barclays Chairman David Walker acknowledged the storm unleashed by the bigger bonuses.
"Bonuses up, profits down. Not a headline we would have chosen," Walker said.
But he said Barclays had no choice, faced with a potential exodus of staff in the United States, where total pay at some of its competitors was rising fast.
"Our resignation rate for senior employees in the U.S. almost doubled in 2013," Walker said.
Barclays' investment bankers shared a 2013 bonus pot of £1.6 billion ($2.7 billion), up 13% from 2012. The big jump followed a year in which investment banking profits fell by 40%, dividends remained flat and shareholders were asked to cough up £5.8 billion ($9.7 billion) in fresh capital.
And the poor performance appears to have continued in the first quarter of 2014. Barclays said its fixed income, currencies and commodities business saw a "significant" decline, which would result in lower pre-tax profits for the bank as a whole.
Barclays is scheduled to report quarterly results May 6.
Pressure to reign in excessive pay is coming from politicians, as well as investors.
A senior British government minister wrote to the 100 largest listed companies in the U.K. earlier this week, hinting at tougher rules if they fail to crack down on big pay awards.
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