The mystery in the tale of Barclays' latest bonus bonanza is that institutional shareholders are not screaming their complaints from the rooftops. Give it time.
Many in the old-school investment camp – long-only London-based funds – are quietly seething about what they regard as a lost year at Barclays.
Many would agree with the Institute of Directors, hardly a cockpit of Marxist fury, that capitalism isn't working at Barclays. Shareholders will get £859m in dividends and staff, chiefly in the investment bank, will collect £2.4bn in bonuses after a year in which profits fell steeply and the bank once again failed to achieve an adequate return on equity. As the IoD correctly says, the bank is being run for its staff, not its owners.
Shareholders' reticence (so far) perhaps reflects that fact that the long-only brigade applauded chief executive Antony Jenkins' "transform" programme a year ago. They bought Jenkins' line that Barclays should be a "universal bank" and are not brave enough – yet – to tell Barclays to get smaller in investment banking and concentrate on retail banking and the slick Barclaycard operation.
But there's nothing like a slumping share price to concentrate minds and change a mood. Barclays' shares have fallen 8% since Tuesday's full-year figures and the valuation is now horrible. The bank, still making substantial profits, is valued at just 0.8 times book value: the market is saying it expects Barclays to destroy value. Lloyds, by contrast, is priced at 1.6 times book value.
Jenkins probably has a year – no more – to improve matters. In January last year he was inviting staff who did not wish to live by the bank's new "values", which were taken to include a fairer cut of the spoils for investors, to leave. "My message to those people is simple: Barclays is not the place for you," he wrote in a memo. Now he finds himself inflating the bonus pool to persuade equity salesmen and deal-makers to stay. He looks a weaker leader.
In Barclays' world, there has been no U-turn. According to the official script, the bank merely overdid things a year ago when it cut the bonus pool to £2.2bn from £2.5bn. This year's increase to £2.4bn is pitched as a roundabout route to the same happy land where the investment bank's return on equity, just 8.2% in 2013, will consistently exceed Barclays' bare-minimum target of 11.5%. It was always a three-year plan, comes the shrug from Canary Wharf.
Jenkins hasn't got that long. He has taken a high-risk gamble that an investment in the "franchise" will make the ratios improve. That bet must succeed quickly. If not, Jenkins will find himself with a double headache in investment banking – sub-par returns and staff who wonder whether Barclays is really a committed owner.
April's annual meeting, as in 2012, the last year of the unlovely Bob Diamond/Marcus Agius show, will be a bunfight. Afterwards, one suspects, old-style fund managers will calm down and see what the rest of the year brings. But, if Jenkins and chairman Sir David Walker are still torturing shareholders with miserable dividends and a similar bonus ratio next February, patience may snap. Jenkins is still a new boy, but he burned a lot of goodwill this week.
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