Barclays bankers set for bonus bonanza as City dealmaking sends profits to record highs
Barclays bankers are set for bumper bonuses as a surge in takeover activity sparks a fees bonanza in the City.
The bank posted profits of £6.9billion for the first nine months of the year – a record high and up 187.5 per cent on the same period in 2020. Third quarter profits alone hit £2billion, 20 per cent ahead of expectations.
The performance was driven by the investment bank, vindicating the strategy pursued by chief executive Jes Staley who fought off efforts by activist investor Ed Bramson to scale back the division.
Vindicated: Barclays chief exec Jes Staley (pictured) fought off efforts by activist investor Ed Bramson to scale back the investment division
Investment banking fees came in at £971million in the third quarter, up from £610million in the same period last year and comparable to the big gains posted by Wall Street rivals last week.
The investment bank, headed by Paul Compton, has been targeting tech floats as an area of growth.
Barclays was the lead advisor on bringing money transfer business Wise to the London stock exchange in July.
The listing was hailed as a triumph for the City as it seeks to attract more financial technology businesses.
The bank also advised on the IPO of DNA sequencing firm Oxford Nanopore last month, while Britishvolt, which makes batteries for electric cars, is still in the bank’s pipeline.
Other deals worked on include advising John Laing on its sale to private equity giant KKR and the merger of BHP’s oil business with Woodside Petroleum.
Danni Hewson, analyst at broker AJ Bell, said: ‘Unlike peers like Lloyds and Natwest, which retrenched in the wake of the financial crisis to become fairly straightforward lenders, Barclays still has a major investment banking arm.
‘This allowed it to follow in the footsteps of US peers which earlier this month reported a major boost from the recent frenzy of dealmaking in financial markets and the wider corporate world.’
The performance means Barclays bankers are on course for bumper bonuses in the New Year.
High flyers are set to scoop millions of pounds while others will pick up hundreds of thousands. In 2020 the bonus pool rose by 6 per cent to £1.6billion despite a 30 per cent drop in profits during the Covid crisis.
Staley told Bloomberg: ‘The bonus pool is tied to the corporate and investment bank, you will see compensation higher this year given that they have generated record profits.’
Staley was also buoyant about the prospects for the UK economy, brushing aside fears over inflation, supply bottlenecks and the energy crisis.
The bank raised its growth forecast for UK GDP this year to 7 per cent from its prediction of 6.5 per cent in April when the economy was just emerging from lockdown.
Staley said: ‘A degree of inflation will be welcomed so long as it is driven by economic growth, that could be a positive.
‘The supply chain disruptions are there. It’s not holding back an economy that’s going to grow at 7 per cent. Its long-term impact will be quite modest.’
Staley also moved to quell reports that he could leave by the end of this year amid an ongoing investigation by the Financial Conduct Authority over his ties to sex offender Jeffrey Epstein. It is Staley’s second run-in with the regulator since joining the bank in 2015.
It is understood the bank is on the hunt for a replacement but yesterday Staley told the Evening Standard he would be staying for another two years.
He said: ‘We are taking the Jamie Dimon [boss of JP Morgan] approach. Every year Jamie says, “another five years”. I say “another two years”.’
Wall Street banks such as Goldman Sachs and JP Morgan last week reported booming profits from deal making.
Barclays insists it is holding its own and grabbing market share.
‘We now have a position as one of the top six global investment banks and we’re going to keep that,’ said Staley, referring to Barclays vaulting Credit Suisse in industry rankings.
Its Swiss rival is reeling after a succession of scandals caused billions in losses.
Barclays shares have doubled in the last year but yesterday, however, the stock fell 0.8 per cent, or 1.54p, to 196.9p.