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Bonus wars begin: Barclays boss tipped for £1m reward

Barclays chief executive Antony Jenkins took over from Bob Diamond in August 2012. Photo: Barclays

We are some weeks away from the big banks being ready to divulge details of their bonus pots but conversations behind closed doors are already reaching fever pitch.

Those discussions are complicated this year by the fact that RBS, which we own most of, is about to be hit with a whopping fine for past sins of rigging interest rates.

And of course there's a new chief executive at Barclays who believes that bankers should be behave, and be paid, in a different way.

In the next couple of weeks there will be pages and pages of speculation, so here are some things we do know:

  • 1. Antony Jenkins' bonus

I understand that the new Barclays boss, Antony Jenkins, is to be paid around £1m as an annual bonus on top of his £1.1m salary.

One significant shareholder told me the figure "strikes a reasonable balance".

It is certainly much less than the total amount he could be awarded, which would be 250 percent of his salary: £2.75m.

But given compensation over PPI, Libor, and swap policies sold to small businesses (more of that from the FSA this Thursday) it may still raise eyebrows.

Jenkins is also expected to be given a significant chunk of his long term share award - the 'LTIP'.

That is expected to be shares around twice the value of his salary but that will be judged over three years and it's worth noting that LTIPs don't always pay out.

No final decisions have been taken yet but shareholders are being sounded out.

  • 2. RBS Libor fine

RBS is expected to be hit with a Libor fine of around £500m - probably around £400m to American regulators and around £100m to the FSA in Britain.

They have indicated that they will take some of the money for the fines from the investment bank bonus pool and also that high-profile heads may roll.

A couple of weeks ago I wrote about the probable departure of John Hourican in order to show a sense of mea culpa when the Libor fine hits.

But just weeks after that report is due to finally emerge, RBS may still pay out more than £200m in bonuses to its investment bankers.

For the taxpayer bank under fire from regulators on both sides of the Atlantic, paying any bonuses at all may feel rather ambitious.

  • 3. Bonus row presents problems for the government

The Libor report into RBS and any subsequent bonus row is an absolute nightmare for the government.

After last year's poisonous dispute over Stephen Hester's bonus, the Treasury and UKFI, which represents the public as shareholders, are nervous about how to handle it without alienating him so much that he walks.

But at the same time they are still keen to try to stay on the right side of public opinion.

One source told me that the relationship between the bank and the government is "unbelievably complicated and difficult," and while they would be "genuinely surprised if this goes to Stephen Hester, there may be a populist riot."

  • 4. Precedent set by Lloyds boss

Last year the chief executive at Lloyds, the other bank that has a taxpayer-owned stake, Antonio Horso-Ortario, turned down his bonus, in part because he had a period of time off work.

The bank has made no such indication this year and it's suggested that given the huge increase in the share price at the bank this year (more than 80 percent) that Lloyds will award him his bonus this year.

Indeed a source suggests that "if you can't give him it this year, then how do you tell anyone that you can come to one of these banks and run it and get paid?"

But in this economic climate, particularly with Lloyds having made more than a thousand redundancies since the start of the year, that argument may be severely tested.