Bank boss: We deserve bonus

The head of Barclays today defended the bank's decision to pay hundreds of millions of pounds in bonuses.

Chief executive John Varley said they were entitled to reward top staff because Barclays "made a profit" of £6.1 billion.

He spoke out as Chief Secretary to the Treasury Yvette Cooper told bankers, many of them held responsible for the financial meltdown, to examine their consciences on bonuses.

"Senior executives need to take responsibility and consider whether they should be taking bonuses," she said.

In a clear swipe at loss-making rival Royal Bank of Scotland, Mr Varley said: "It is important to make the distinction between those banks which have made a profit and those which have not when it comes to bonuses."

However, he acknowledged that the world had changed and said the banking industry would have to overhaul the way it rewarded its people at a time of huge public anger over bonuses.

Barclays did not need any of the £37 billion taxpayer bail-out of the UK banks but it has taken advantage of government guarantee schemes.

Mr Varley said Barclays profits were down 14 per cent. He said bonuses for last year, one of the worst years in banking history, were 48  per cent lower. Main board directors will get no bonuses, he added.

However, industry insiders said that leading figures, such as Roger Jenkins at Barclays, would be rewarded with packages running to many millions of pounds.

Barclays does not reveal how much it paid out in bonuses last year but total staff costs fell from just over £7 billion in 2007 to £6.25 billion last year even though the number of employees increased from 135,000 to 155,000.

Today's figures reveal that average pay and bonus for the 18,600 employees at Barclays Capital fell from £193,000 to £124,000 last year.

Mr Varley is due to face questioning from MPs on Wednesday along with other top bankers. He said: "This is clearly a very important subject and I absolutely understand why it has got the attention of the world."

A fresh acknowledgement of the damage the bonus culture has caused to the reputation of bankers came today from Lloyd Blankfein, chief executive of Goldman Sachs.

Writing in the Financial Times, he said there had to be a change in the way compensation was calculated, particularly as his bank had used the US government bail out. "Understandably, compensation continues to generate a lot of anger and controversy," said Mr Blankfein who was paid £46 million in bonuses in 2007.