Skip to main content

Bonuses and Barclays

It has not been a good couple of days for Barclays. 

First, the BBC's Panorama programme alleged that the bank misled its shareholders about the huge capital investment it received during the midst of the 2008 financial crisis. Unlike other UK banks, Barclays did not take a taxpayer-funded capital injection. Instead, it obtained capital from the Abu Dhabi government. According to the Panorama programme, the sole reason Barclays went down this route was to preserve their bonus culture. You can read about this here and UK residents can watch the Panorama programme here. 

Second, Barclays announced profits today of £246m for 2012, down from £5.88bn in 2011. It is also going to get rid of 3,700 jobs. However, despite reduced profitability and job losses, the bonus pool for employees in 2012 was a staggering £1.85bn!  

Popular posts from this blog

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of
Read more

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press . 
Read more

The Great Depression

Marginal Revolution University has a great video on the Great Depression.
Read more