Posted on Thursday, January 13, 2011
LONDON — A public debate about bankers’ bonuses is heating up in Britain as lawmakers ask for restraint on pay while some bankers ask to stop being blamed for the weak economy.
The chief executive of Barclays, Robert E. Diamond Jr., said Tuesday that it was time to move on from criticizing and to let banks and the private sector create jobs and economic growth at a time when the British government planned to cut thousands of public-sector jobs.
“There was a period for remorse of banks but I think this period is over,” Mr. Diamond told a parliamentary committee. “The question for us is how do we put some of the blame game behind us.”
His comments were criticized by some lawmakers, who said that there was a lack of accountability for the financial crisis and that the banks continued to pay large bonuses while people on lower incomes struggled.
Mr. Diamond, who became chief executive of the bank on Jan. 1, said the banking sector had made mistakes. But he argued that “banks have learned throughout this process,” adding that there was “no lack of effort on our part to recognize and be responsible and to be sensitive to this issue” of bonuses.
He declined to say whether he would forgo his bonus this year or comment on reports in the British media that his bonus could be as high as £8 million ($12 million). Barclays’ board has yet to decide on the size of bonuses, he said.
During the questioning by members of Parliament, which lasted more than two hours and touched on topics from compensation to competition in the banking industry, Mr. Diamond remained calm and composed.
One committee member, Andrea Leadsom, said the debate about bonuses reminded her of “The Emperor’s New Clothes,” saying that banks did not want to acknowledge that there was a problem with big bonus payments at a time when the government’s austerity plan was expected to hurt many people on a lower income.
Mr. Diamond said that he was “aware of the emotion around bonuses” and pledged to “show restraint” when it came to pay.
But he also said, “I am a businessman who runs a business,” adding that decisions on the size of bonuses needed to be a balance between the expectations of customers, shareholders, employees and regulators.
Mr. Diamond said he was not asked by the prime minister or the head of the Treasury to show restraint on his own bonus for 2010. Mr. Diamond, who previously was head of Barclays Capital, the bank’s investment banking unit, declined to receive a bonus in 2008 and 2009 after receiving a £6.5 million bonus as well as his £250,000 base salary in 2007.
Keith Bowman, an analyst with the stock brokerage Hargreaves Lansdown, said, “There may be more banks could do to increase the transparency about bonus pay, but it all comes down to the issue that this industry is a global one, and it’s difficult for anyone to go it alone.”
The government has been meeting with banking executives in recent months to discuss bonus payments, which are due in the first quarter of this year. Prime Minister David Cameron said Sunday that banks “should pay smaller bonuses” and be more “socially responsible.”
In a step to make its compensation more acceptable to investors, Credit Suisse said on Monday that it would pay a greater amount of its bonuses in deferred compensation and more of it in stock rather than cash.
Mr. Diamond also told lawmakers that Barclays had no intention of moving its operations abroad. Some banks, including HSBC, had threatened to consider such moves in light of tighter regulation.
“I can’t give an ironclad guarantee,” he said, “but I want you to rest assured that this is the place we want to be.”
By JULIA WERDIGIER, THE NEW YORK TIMES