Barclays’ profits tumble after a trading error cost the company more than £1bn. The bank must pay £1.6 billion in legal and regulatory fees to correct a mistake that caused it to sell US securities where it was prohibited from doing so.
The mistake forced the bank to buy back the products and $361 million in compensation.
Barclays said its pre-tax profit was £7bn in 2022, up from £8bn in 2021, sending its shares plummeting. Poor financial results weighed on the FTSE 100 as the stock market hit an all-time high of 8,000 points.
The bank last year cut its employees’ bonus fund by almost £500m following a missale and a scandal involving some of its bankers in a wider investigation into staff’s use of a private messaging app to discuss business and transactions.
The £1.79bn bonus pool is down 8% from £1.94bn in 2021.
Barclays defended the level of bonuses, saying it allows the bank to “solve the challenges of a competitive global marketplace and attract and retain the talent we need to achieve our goals.”
The number of bankers who earned more than 1 million euros amounted to 698 people.
As a result of the error, CEO K. S. Venkatakrishnan’s bonus was reduced by £403,000 and CFO Anna Cross’s bonus by £166,000.
Barclays said the CEO, who is currently being treated for blood cancer in the US, took home £5.2 million in 2022, including an annual bonus of nearly £2 million.
In a pre-recorded message, he said: “We are cautious about the global economic picture but still see growth opportunities for all of our businesses in 2023.”
The bank said former CEO Jes Staley, who is under regulatory investigation for how he characterized his relationship with sex offender Jeffrey Epstein, received £2.3m in wages and other benefits last year.
Profits for Barclays UK, the consumer banking division, rose 13 percent year-over-year as the company benefited from rate hikes by the Bank of England. The bank, like its peers, has been criticized for not providing the benefit of higher interest rates on savings.
New mortgages fell 11 percent last year. The decline was due to the turbulence in the mortgage market, following the “mini-budget” last fall.
Barclays said it has set aside £1.2bn to cover potential mortgage defaults and loan losses as pressure intensifies on households and businesses already struggling from the cost of living crisis.
Ms Cross said: “There is no doubt that this is a very challenging environment for some clients in terms of inflation. But this does not lead to adverse credit behavior. We do not see an increase in arrears.”
Barclays said it was tightening lending to coal-fired plants and halting funding for oil sands exploration and production, but has not announced new restrictions on oil and gas lending as competitors have, despite mounting pressure from environmental activists and shareholders.
Campaign groups have expressed disappointment with Barclays’ move. “By continuing down this path, Barclays is ignoring science and its customers,” says Tony Burdon of Make My Money Matter.
Source: I News
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