Morning Coffee: Barclays' CEO bonus changes carry an omen for the investment bank. HSBC's 400 job cuts blamed on politics
Barclays hasn't announced its 2024 bonuses yet, but when it does, there are signs that they could be a bit different.
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Barclays lifted the European Union's bonus cap in August 2024, to allow for bonuses to become ten instead of two times salary for its material risk-takers (managing directors and other people of import). Yesterday, Sky News reported that Barclays' CEO, C.S. Venkatakrishnan (Venkat), is getting the same treatment.
Venkat is becoming eligible for bonuses that are worth eight times his fixed pay, instead of two times his fixed pay last year. If all goes well, Venkat's bonus for 2025 could be £12.4m, up from less than £2m in the recent past. Exciting.
Such things do not come without their own challenges, though. While Venkat's potential bonus is being increased, the salary and allowance he was previously receiving no matter what, are being cut. Last year he got £2.95m. This year, his salary and allowance will be £1.59m instead.
Unfortunately, there's no guarantee that Venkat's bigger £12.4m bonus will be forthcoming. As with any bonus, this is contingent on performance, and in Venkat's case the performance criteria sound a bit ominous for the investment bank.
The Financial Times notes that if he's to achieve his full £12.4m bonus, Barclays commands that Venkat must achieve a return on tangible equity across the bank of 14%. If he wants a £9m bonus, he must achieve a return on tangible equity of 12%, the bank's current target.
This is ominous, because Barclay's investment bank has long been a drag on its overall return on equity. In late 2023, there were suggestions that Venkat was being pushed to achieve a sustainable 14-15% return on equity (RoE) in
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