Barclays bank sees 2010 profits surge, cuts bonuses

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British bank Barclays said Tuesday that annual profits soared by more than a third, as bad debts fell dramatically, and cut its staff bonuses in line with a government-brokered deal.

Pre-tax profits leapt 33 percent to £6.079 billion (7.268 billion euros, $9.812 billion) last year, compared with £4.559 billion in 2009, the group said in a results statement.

Earnings after taxation jumped 36 percent to £3.56 billion, as write-downs shrank and the group almost doubled profits at its investment arm.

Impairment charges and other bad debt provisions plunged 30 percent to £5.672 billion, added the bank, which survived the global financial crisis without state support unlike many rivals.

Barclays also said it would pay out £3.4 billion in staff bonuses, down 7.0 percent compared with 2009, although total pay rose by a quarter as this included payments deferred during the global financial crisis.

"I am proud of what we achieved in 2010, especially our profit growth and enhanced capital and liquidity positions," said new chief executive Bob Diamond.

He added: "Barclays delivered a significant increase in profit ... despite continued economic challenges in our principal markets: historically low interest rates; sluggish volumes in many market segments; and considerable regulatory uncertainty."

In reaction to the bumper profits, Barclays' share price surged 5.79 percent to finish at 328.75 pence, with other banking groups also gaining. London's FTSE 100 index meanwhile closed 0.38 percent down at 6,037.08 points.

"Barclays bank is the stand out performer after reporting profits of £6.1 billion, well ahead of forecasts of £5.5 billion," said CMC Markets analyst Michael Hewson.

"This has helped the rest of the banking sector higher with Lloyds and Royal Bank of Scotland (RBS) climbing in its slipstream."

Barclays is the first of Britain's major banks to report annual earnings, with HSBC and state-rescued RBS and bailed-out Lloyds set to unveil their results over the next fortnight.

Amid public anger over bankers' high pay and a fragile economic recovery in Britain, the coalition government last week struck a deal with all of the country's major lenders on bonus pay and overall lending.

Finance minister George Osborne said total bonuses paid to British-based staff of the biggest banks would be lower than last year as part of Project Merlin, brokered after weeks of talks with the Conservative-led coalition.

Prime Minister David Cameron's official spokesman declined to comment on Barclays' remuneration, telling reporters: "Clearly, Barclays' pay policy is ultimately a matter for them and their board."

Explaining the cut in Barclays' bonus pot, Diamond said: "We are committed to demonstrating that we are both responsible in our compensation decisions and practices and that we take our regulatory obligations and UK government commitments seriously.

"In particular, our overall performance awards for 2010 have been directly influenced by the commitments that we have made under Project Merlin."

Barclays also unveiled measures that will see senior staff bonuses deferred over three years and be paid only if the bank meets its capital requirements under the new Basel III international agreement.

American Diamond, who became chief executive last month after replacing John Varley, is infamous in Britain for pocketing huge bonuses as head of Barclays' highly successful investment banking division.

As boss of Barclays Capital, Diamond was at the forefront of Barclays' transformation from a well-run retail bank into an investment banking giant able to compete with Wall Street titans.

Barclays Capital reported pre-tax profits of £4.78 billion last year, up 94 percent compared with 2009.

© 2011 AFP

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