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Economy

Barclays Raises Bonuses 10%, Cuts 12,000 Jobs

Translated Thursday 27 February 2014, by Gene Zbikowski

On Feb. 11, Barclays, the British bank, simultaneously announced an increase in the bonuses granted to its bankers and the shedding of 10,000 to 12,000 jobs, mainly in Britain. This will increase Britons’ legitimate anger at the City.

Barclays, which employs around 139,000 workers, is patting itself on the back on its "return to the black." In 2013, the bank indeed made a net profit of around 650 million euros. The problem was that in 2012 the bank, up to its neck in financial scandals, was forced to pay a 360-million-euro fine and to compensate customers for the improper sale of financial products.

"At Barclays, we believe in remuneration according to performance" with a view to "ensuring that we have the right people doing the right jobs," the bank said to justify itself. A pretty increase of nearly 10% in bonuses, amounting to 2.8 billion euros, will be paid out to traders. Thus Barclays felt that, after "close examination" such a raise was "in shareholders’ long-term interest." "We employ people from Singapore to San Francisco. We compete on the world markets to find talent. If we want to act in our shareholders’ interest, we have to ensure that our team is made up of the best."

That ought to reassure the workers who simultaneously learned on Feb. 11 that 7,000 jobs would be cut in Great Britain, out of a total of 12,000 jobs across the globe. Last year, Barclays had already announced the shedding of at least 3,700 jobs. The British trade unions reacted rapidly: Despite the "promises" of a "change in culture," Barclays "is upping the bonuses of those who already enjoy unimaginable salaries" and "is continuing to announce thousands of job cuts for ordinary workers," Dominic Hook, of the Unite trade union, said in condemnation.

A bank with a deplorable image

Amazingly, such a job-shedding scheme has not caused Barclays stock to skyrocket. On the contrary, shares had fallen by 6% in London at midday. The problem is that the bank has been in the throes of a new scandal since the British regulation authority announced on Feb. 9 that it was opening an enquiry into the theft and resale of confidential data on several thousand Barclays customers. And the scandals have come one after the other. In 2012, Barclays found itself up to its neck in the Libor affair. This concerns a self-regulating mechanism that allows the banks, by putting their heads together, to set the interest rates to be charged on inter-bank loans, each morning when the markets open. Beginning in 2005, Barclays bank (followed by others) began knowingly skewing the interest rates, both upwards and downwards. Traders who were forewarned of the direction of the change were able to speculate accordingly. Amid the subprime crisis, these banks manipulated the interest rates to camouflage their poor health and to refinance themselves at a discount.

In addition to the scandals, the issue of the indecent bonuses enjoyed by City traders in the middle of the economic crisis, at a time when Britain has, for the past few years, been undergoing a cruel bout of austerity, is something that it hard to swallow.


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