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Barclays' bonuses fall foul of the scourge of guarantees

There are haves and have-nots in this year's bonus round. The haves are not simply the people who've been strong performers. They are also anyone who received a guarantee.

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Bonus pools for 2023 are down by as much as 30% on the numbers for 2022. However, bankers and traders who were allocated assured payouts during the year - either to persuade them to change jobs or to keep them happy - are immune to the squeeze. And they are depleting the bonus pool for everyone else.  

Barclays doesn't announce its bonuses until the 20th, but when it does, Bloomberg reports that the guarantee bonuses it offered to senior M&A bankers last year will come back to bite. With the guarantees draining the bonus pool, Barclays is reportedly planning to hand out zero bonuses to poor performers in its banking team in a presumable effort to save money.

As we reported in May, Barclays was afflicted by senior banker exits to UBS after it overlooked Marco Valla for the head of investment banking role and appointed Cathal Deasy (whom no one in the US could understand) instead. The Wall Street Journal subsequently reported that the exits were also the result of a failure to pay guarantees that had been verbally promised for 2022. Barclays' bankers appear to blame both decisions on Paul Compton, the head of Barclays' corporate and investment bank, who is partial to cost-cutting.

Reneging on the verbal guarantees in 2022 has cost Barclays in 2023. Not only was it compelled to hire in new investment bankers to replace the 10+ managing directors (MDs) who left, and to offer the new hires guarantees. It's also, seemingly, been forced to offer written guarantees to existing staff to prevent them from going too. In a year when Barclays' M&A revenues fell 26% in the first nine months, that means savings must be found elsewhere.

 Barclays' underpaid bankers can at least console themselves with the thought that they're not the only ones whose bonuses were diverted to new hires and people threatening to quit. There have been similar complaints at Jefferies and - ironically - at UBS, which paid guarantees to many of the MDs it hired from Barclays last year.

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AUTHORSarah Butcher Global Editor

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