BarCap ‘has been handed greater share of revenue’

While individual bonuses at Barclays Capital may have been cut by as much as 10 per cent, newspaper reports said the overall compensation pool covering pay and incentives will have risen to about 40 per cent of BarCap revenues.

Reports said Barclays will say that it has reduced bonuses for British bankers in line with last week’s Project Merlin agreement, although overall pay has stayed high because salaries are not controlled by the deal.

It is also thought that measures used to account for deferred bonuses from 2009 and BarCap’s push into new areas of business will have inflated compensation.

Barclays will provide details of its pay and bonus figure alongside the bank’s full-year results, when pre-tax profits of £5.8 billion are expected.

Bob Diamond, the new chief executive, will say that bonuses will be subject to “claw-back” in future if the bank’s capital reserves fall below a specified level.

He is said to be in line for a bonus of more than £9m but details of Mr Diamond’s pay packet may not be disclosed until the company’s annual report is published next month.

Barclays is reported to be planning to tie the bonuses of 1,000 senior staff to the level of its tier one capital, a key measure of bank strength.

The bank would claw back the deferred cash part of managing directors’ bonuses if the tier one capital ratio fell below seven per cent.

The move reportedly came after the bank abandoned plans to pay bonuses in contingent convertible bonds which would convert to equities and fall in value if the bank got into trouble in future.

Mr Diamond, who took over as chief executive in January, will use his first set of results as boss to update investors on a strategic review, with the bank expected to exit some of its international retail operations.

BarCap, the division formerly headed by Mr Diamond, is estimated to contribute towards 60 per cent of the bank’s profits.

But, as reflected in US banking results earlier this year, the sector suffered from weak activity in the final three months of last year.

Nomura analysts have forecast BarCap’s pre-tax profits will be around £4.3 billion, broadly flat on the previous year, compared with £805m in UK retail banking, up on the £752m in 2009.

Over the following two weeks, HSBC is expected to announce the largest profit for the 2010 financial year, an estimated £13.5 billion, more than double 2009’s £5.16 billion, while Standard Chartered’s profits will be around £4.5 billion, up from £3.8 billion.

The state-backed banks are expected to deliver considerably lower numbers.