Barclays reports profits up 92 percent

| Friday February 19, 2010 00:00

The figure was boosted by the sale of its BGI fund management arm to US firm BlackRock last year. Stripping this out, profits were £5.6bn compared with £1.6bn in 2008, though that figure included hefty write-downs. The bank, which did not take any direct state help during the financial crisis, said its total bonus payouts for staff had been reined in to £2.7bn.

It will pay £1.5bn in bonuses for 2009 and a further £1.2bn to be paid over three years. Most of these bonuses go to staff at its Barclays Capital investment banking arm - which made £2.5bn.

Some 22,000 investment banking staff are receiving £191,000 each on average in salary and bonuses - of which £95,000 is discretionary bonus. But the bank said that chief executive John Varley and president Bob Diamond had turned down bonuses for the second consecutive year, given 'intense public interest and concern' about bankers' pay.

The large profits enjoyed by bankers have prompted widespread public anger because the banking sector was widely perceived to have taken dangerous risks which led to the global recession.

Barclays opted not to join the UK government's bail-out scheme for banks, instead opting to rebuild its finances using funds from the Middle East. However, BBC business editor Robert Peston said some would argue it had benefited indirectly 'from a windfall generated by the emergency rescue of the global economy undertaken by governments and central banks, an emergency rescue that was needed in large part because of the havoc wreaked by the excessive risk-taking of banks'. Last week, Varley defended the role of big banks in the global financial system.

Appearing in front of the Commons Treasury Committee, he said that big banks were not necessarily riskier than small banks. Barclays said it had loaned about £35bn to businesses and households in the UK in 2009, having promised in April to lend at least £11bn. The willingness for banks to lend is seen as an important factor for economic recovery.

However, a report by the Institute of Directors suggested that almost 60 percent of businesses seeking bank finance in the past year had been rejected - with some saying they had been forced to borrow on their credit cards.Shares in Barclays were up by more than 6 percent in Tuesday morning trading.

Richard Hunter, of Hargreaves Lansdown stockbrokers, said the results were 'further proof that Barclays has skilfully woven its way through the recessionary minefield'.

'With or without the sale of BGI, the figures are extremely impressive,' he added.'Today's announcement reiterates Barclays' position as a major global force, whilst also setting the standard in kicking off the UK banking reporting season.'-(BBC)