News
Barclays bosses John Varley and Bob Diamond Waive their 2009 Bonuses - The Times, Febuary 17th 2009
The bosses of Royal Bank of Scotland and Lloyds are under pressure to waive their bonuses for 2009 after the chief executive of Barclays revealed yesterday that he would not take a performance-related payout.
In an attempt to defuse public anger over bankers’ pay, John Varley and Bob Diamond, the Barclays president, opted for the second consecutive year not to receive a bonus.
Mr Varley said that he was sensitive to outrage over bonuses at a time when “public sector pay has been frozen as a result of the recession”.
Barclays cut total pay as a proportion of revenues to 38 per cent last year, down from 44 per cent in 2008. On average Barclays’ 23,000 investment bankers each received £191,000, although many received multimillion-pound payouts.
The financial cost of the waiver decision was eased for Mr Diamond because, while he did not take a bonus for 2009, he collected £22 million in December for his shares in Barclays’ fund management arm, Barclays Global Investors, which was sold to BlackRock in the US.
Across the group, Barclays’ average pay was £54,000, including a £19,000 bonus.
Barclays did not reveal the size of the bonus that Mr Diamond and Mr Varley rejected. The bank almost doubled its pre-tax profits in 2009 to £11.6 billion and recorded a 34 per cent increase in income to a record £31 billion. In 2007, at the peak of the credit boom, Mr Varley received £4.2 million, including a £1.4 million cash bonus. Mr Diamond received £21 million, made up in part of a £6.5 million cash bonus.
A spokesman for Lloyds said that no decision had been made about the 2009 payment to its chief executive, Eric Daniels. Mr Daniels could receive up to £3.4 million if the bank’s remuneration committee awards him his full bonus plus salary.
Stephen Hester, RBS chief executive, caused controversy by striking a pay deal worth up to £9 million for 2009 when he took over the stricken bank in November 2008. RBS, which is 84 per cent owned by the taxpayer, must get an agreement from UK Financial Investments, the public body that manages the State’s stakes in banks, to pay £1.3 billion in bonuses to staff, up from £1 billion in 2008.
RBS and Lloyds will announce their annual results next week. Both may rethink proposed payments to their senior managers after Barclays’ move.
Vince Cable, the Liberal Democrats’ Treasury spokesman, said: “Mr Varley has put his opposite numbers on the spot. It is hard to see how they can take a bonus in these circumstances.”
Despite being majority-owned by the Government, RBS may argue that it should still hand over its planned award for Mr Hester as he was not responsible for the bank’s collapse. Similarly, Lloyds executives responsible for setting pay may feel that it has to reward Mr Daniels because even though he oversaw the bank’s controversial takeover of its beleaguered rival HBOS, he has pulled off a record rights issue, which kept the Government’s stake capped at 41 per cent.
House price rise set to reach double digits - The Times, Friday January 29th
House prices rose by 8.6 per cent in January, compared with the same month last year, raising hopes that annual inflation will soon reach double digits for the first time in almost three years.
The last time the UK saw year-on-year house price rises of more than 10 per cent was in May 2007.
Month-on-month, average house prices increased by 1.2 per cent, according to the Nationwide, the UK’s largest building society, taking the average cost of a home in the UK to £163,481.
The three-month rate of change, usually a smoother indicator of the house price change than a single month's figures, dipped slightly from 2.3 per cent in December to 2.1 per cent in January, but the building society said this was mainly a result of small increases at the end of last year.
There was a surge of purchases at the end of 2009, unusual for the winter period, as buyers tried to beat the change in the stamp duty threshold brought back on January 1.
Martin Gahbauer, chief economist at the Nationwide, said: "Unless there is a fall in property values in February, annual house price inflation is likely to move into double-digit territory next month for the first time since May 2007."
He added that although it was encouraging that the UK was now out of recession, albeit by less than economists had hoped, it would not necessarily impact greatly on house prices.
