domingo, 9 de enero de 2011

Britain's best-paid bank boss set for showdown with MPs over huge bonus - The Guardian

Bob Diamond
Barclays boss Bob Diamond, Britain's highest-paid banker, who faces MPs this week. Photograph: Stefan Wermuth/Reuters

Britain's best-paid banking boss, the Barclays chief executive Bob Diamond, will face intense pressure from MPs to waive his multimillion-pound bonus this week in recognition of the austere economic conditions and public intolerance of outsized City pay cheques.

An appearance by Diamond in front of the Treasury select committee on Tuesday is set to become a key clash between Westminster and the City as the coalition's efforts to tame bankers' pay falter.

Last night MP John Mann, a Labour member of the committee, said he and others would call on Diamond to forgo any bonus for 2010, when he was head of Barclays' investment banking arm.

"He will be asked not to take any bonus at all," said Mann. "We will want to know exactly how much these executives are getting in bonuses and other payments and why. There will be some tough questions."

Mann said that the committee would also press Diamond to disclose whether top Barclays staff were to receive "supplementary salaries", which MPs suspect are being handed out in addition to official remuneration.

The issue of bankers' pay has become highly toxic at Westminster, with MPs acutely aware that sky-high payments are fuelling public resentment over government cuts and the coalition's plans to triple university fees.

US-born Diamond, who took the top job at Barclays this month after five years running the group's investment banking operations, is, however, understood to be reluctant to give up his bonus.

Insiders say the entire industry is watching. One City source said: "If Bob were to say no to a bonus, that would mean, in practice, that everyone else would have to say no."

Diamond has made £75m over the past five years. But since the credit crunch in 2008, the heads of all of Britain's top banks have agreed to surrender their bonuses entirely or to donate them to charity. Diamond, along with many of his rivals, is thought to be shaping up for a fight this year, insisting that the time for "gestures" has passed.

The bonus season will kick off on Friday when the US bank JP Morgan, which employs 11,000 people in Britain, reports annual profits. Analysts at Bernstein Research expect JP Morgan's accounts to reveal that it has set aside $6.8bn (£4.4bn) to fund salaries, benefits and performance-related pay for its staff. Goldman Sachs, Morgan Stanley and Citigroup will follow later in the month and between them are likely to pay their staff as much as $80bn for 2010.

Britain's banks will follow next month. Barclays is likely to pay out about £2.5bn and in a particularly contentious move, government-controlled Royal Bank of Scotland, which was bailed out by taxpayers in 2008, is hoping to pay £1bn, including cash payments of up to £50,000 a person.

Despite an explicit pledge in the coalition agreement to address bankers' pay, the government's attempts to do so have floundered. Banks have shifted a large proportion of staff rewards from cash into longer-term share payouts, and they have attached "clawback" rules allowing them to recoup payments if losses come to light. But the headline figures paid to brokers, traders and deal-makers have barely shifted, with banks defiantly threatening to quit the Square Mile in favour of Switzerland, Hong Kong or Tokyo if targeted by legislation.

Diamond's appointment has caused concern to some Liberal Democrats who have been campaigning for the investment banking arms of banks to be hived off from their deposit-taking high street operations. Lord Oakeshott, a Liberal Democrat Treasury spokesman, said: "Capitalism needs buccaneers like Bob Diamond but he's utterly unsuitable to run a core British bank." As soon as we split basic banking from casino banking, Britain's economy will be a far safer place".

Diamond is expected to make it clear to MPs that Barclays is committed to lending to the small and medium-sized enterprises that the government is so eager to foster to provide another engine for a sustained economic recovery.

His predecessor John Varley, who stepped down as chief executive at the end of 2010 but will stay on for another 2011 in an advisory capacity, is understood to continue to be leading talks with the government to attempt to deter any tax on bonuses this year. Varley has been the brains behind project Merlin through which the major banks -Lloyds, RBS, HSBC, and Barclays - have offered to lend £200bn to businesses and show some sort of "restraint" on bonuses.

The proposal was presented to Vince Cable, business secretary, and chancellor George Osborne just before Christmas but is yet to be accepted. Fresh talks are expected to take place before the end of the month when Cable returns from a scheduled trip to India.

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