BarCap apparently raising compensation 17%, helping defuse alleged Lehman-tensions
Everyone thought BarCap was going to pay very badly this year. Following questions about seemingly runaway costs in the first half, the expectation was that compensation would be heavily curtailed in the second.
BarCap doesn't report its third quarter results until tomorrow, so this may yet prove the case. However, the Sunday Times thinks BarCap's going to pay ok. Without naming any sources, it claims the bank's accrued 1.5bn compensation in the third quarter.
Added to the 2.9bn BarCap's accrued already this year, this would make total comp of 4.4bn for the first nine months of 2010.
For 2009, BarCap's full year compensation bill was only 4.5bn. However, it's increased headcount by around 2,300 since then. When the extra people are taken into account and pay for the first nine months is rounded up for a full year, BarCap appears to be on track to pay 230k a head, up from 196k in 2009.
Most other banks have squeezed pay for 2010. The only other bank to increase compensation per head is UBS, which has increased its generosity by 14%.
Tense rumours
BarCap's apparent benevolence follows rumours that some of its employees have been harbouring bad concerns about their bonuses.
"One M&A banker at BarCap told me he's afraid the bonus pool won't even cover the guarantees they've made," claims a senior M&A banker (at a rival firm). "Any time someone brings a deal in, all the MDs are rushing to put their name against it," he alleges.
Lehman's M&A bankers seem to be doing better than BarCap's more nascent M&A team in Europe. In the first nine months of this year, BarCap worked on 40 announced M&A deals in Europe and 83 in the US according to
Rumour also has it that a Lehman-inherited system for attributing commission in equities is a source of strife. US bankers with links to European clients are allegedly able to claim credit for fees, even when their involvement has been (very) limited.
A spokesman for BarCap denies this is the case, however. "We share revenues across the business. It's always been like that in BarCap and we've put the same process in place for Lehman. We're a very 'un-siloed' business. That's part of our success," he insists.
