Barclays bankers get a bonus bonanza when City dealmaking pushes profits to record heights

Barclays bankers will receive bumper bonuses due to a surge of takeover activity.

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 investment bank drove the performance, which was a testament to the strategy pursued chief executive Jes STaley who fought back against efforts by activist investor Ed Bramson for the division’s reduction.

Vindicated: Barclays chief exec Jes Staley (pictured) fought off efforts by activist investor Ed Bramson to scale back the investment 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.

Paul Compton, the CEO of the investment bank has targeted tech floats for growth.

Barclays was the principal advisor in bringing Wise, a money transfer business, to the London stock exchange. 

The listing was celebrated as a victory for the City, which seeks to attract more financial tech 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.’

Barclays bankers have been performing well and are poised for big bonuses in the new year.

High-flyers will be able to take home millions of pounds, while others will take home 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 positive about the prospects for UK’s economy, disregarding concerns over inflation, supply shortages and the energy crises.

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 attempted to stop reports that he would be leaving by the end of the year. This was in the midst of an ongoing investigation from the Financial Conduct Authority regarding his ties to Jeffrey Epstein, a sex offender. It is Staley’s second run-in with the regulator since joining the bank in 2015.

Although it is understood that the bank is looking for a replacement, Staley yesterday told the Evening Standard that he would still be there for two more 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 like JP Morgan, Goldman Sachs, and JP Morgan reported last week record profits from their deal making.

Barclays insists that it is retaining its market share and holding its own, Barclays.

‘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.

After a series of scandals that caused billions of dollars in losses, its Swiss counterpart is reeling.

Barclays shares have increased by a third in the last year, but yesterday the stock fell by 0.8 percent, or 1.54p. It was at 196.9p.