Barclays might increase bonuses to £1.45m, but it would probably reduce salaries to £145k
Barclays' bonuses are rising. As we reported earlier, the bank is spending an extra £200m on bonuses at its investment bank this year. Bloomberg reports that the British bank is simultaneously moving to a new pay model in which bonuses for its senior bankers will rise across the board.
This sounds good, but for the fact that while bonuses at Barclays rise, salaries at Barclays are likely to fall.
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Barclays' 2024 annual report stated that the bank would be adopting a bonus cap of 10:1, effective from the 2024 bonus round, versus the previous 2:1 bonus cap imposed by the EU.
The bank has therefore been free to pay substantially higher bonuses for the past two bonus rounds. But it has not done so, yet.
In 2024, for example, Barclays paid its senior bankers designated as material risk takers (MRTs) average salaries of £684k and average bonuses of £779k, for total compensation of £1.5m. In 2025, it paid them average salaries of £652k and average bonuses of £900k, for total compensation of £1.6m.
Bonuses for MRTs are therefore creeping up as a percentage of total compensation, but not by much. Between 2022 and 2025, bonuses went from 47% to 58% of material risk taker compensation.
If and when Barclays pays bonuses equivalent to ten times salaries, recipients are likely to find that their salaries are much lower than £652k. Barclays might be hiking bonuses, but it is also pursuing perpetual "efficiency savings" and doesn't want to spend more on overall compensation.
Applying the new pay structure to last year compensation, would mean an average bonus of roughly £1.45m, but an average salary of only £145k. This is problematic. Bankers and traders quite like having high salaries and reducing them isn't easy. Salary cuts require new contracts and new hires. It might be a long while before Barclays achieves them.
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