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Bob Diamond's £6.5m bonus shows little “restraint”

Don’t believe the myth that Barclays didn’t benefit from state support.

By George Eaton Published 07 March 2011 13:01

It's payday for the man Peter Mandelson once described as the "unacceptable face of banking". Sky News's Mark Kleinman reveals that the Barclays boss Bob Diamond has been awarded a bonus of £6.5m for 2010. In a risible attempt to demonstrate "restraint", £1.8m of the bonus will be paid in shares and £4.7m in "deferred incentives". But the payout still makes Diamond the best-paid boss of the four big high-street banks.

In response, we can expect Barclays to remind us that it did not receive a pound of taxpayers' money. Yet this seemingly plausible defence does not bear scrutiny. Though it was not bailed out by the state, Barclays benefited immensely from the emergency measures introduced by the government to prevent a sector-wide collapse.

As John Varley, the former chief executive at Barclays, conceded in 2009:

There are two ways I would say the system as a whole benefited generically.

One was in the injection of liquidity undertaken by the Bank of England and a new structure put in place in March 2008.

And the other was the making available of guarantees from government for funding undertaken by banks. It is important to recognise that in each case the banks were encouraged to use these new structures that were put in place and we did.

It is also important to recognise that we were required and we did pay a price for these things, but I'm not trivialising the importance of the intervention. It was important.

Without the state-led bailout of RBS and Lloyds-HBOS, there would have been a run on all the banks, including Barclays. It was for this reason that George Osborne, while shadow chancellor, called for a ban on bonuses at banks that had received any sort of government guarantee.

As he said at the time: "It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees . . . it must stop." Having utterly failed to live up to this pledge, Osborne now insists that it's time to move from "retribution to recovery". But as Mervyn King pointed out at the weekend, few share this view.

Last month, Vince Cable rightly denounced the decision to award the RBS chief executive, Stephen Hester, a bonus of £2m as "offensive". Will the coalition's conscience speak out today?

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Tags: Barclays

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View the discussion thread.

18 comments

Tue, 2011-03-08 10:14 — Dominic Lynch O...

Well done Bob Diamond!

If the Banks don't make money, we don't make money! that's just the pecking order! Everyone needs to get over it and start enterprising!!!!

Wed, 2011-03-09 12:15 — crabstix (not verified)

I am ashamed to be a customer, and am now moving my account to the Co-Op.

Protest with your only tool... choice.

Thu, 2011-03-10 10:48 — Reginald-Fah-fah

Bob Diamond should do the right thing and give his bonus to charity!

The reason for this is the public bailout and hardship in society!

Mon, 2011-03-07 13:23 — Dave C (not verified)

Osborne could reinstate Alistair Darling's bonus tax. That raised £2.3 billion.

Tue, 2011-03-08 17:35 — Union Steve

Greedy bastard.

Mon, 2011-03-07 13:36 — Nicholas Shaxson (not verified)

Note Andrew Haldane's recent calculation that

"The implicit subsidy to UK banks in 2009 was around 100 billion pounds sterling. Which is roughly what we spend on our National Health Service."

http://treasureislands.org/uks-implicit-bank-subsidy-cost-of-nhs/

Mon, 2011-03-07 13:50 — mcquade

Please to see that Guardian interview with Osborne is resurfacing. The quote that needs firing back at him time over

"You cannot privatise the gains and socialise the loss in the way that has happened."

And is still happening because of his actions.

Mon, 2011-03-07 15:06 — Wrensense (not verified)

Time to move on? I dont think so.
The country will NOT forget.
even if Gidion wants us to!

Thu, 2011-03-10 13:37 — Hubertus

Funny how footballers who cheat on their wives, get arrested for fighting, and make asses of themselves can earn millions but not someone running a large bank? get a life.

Mon, 2011-03-07 19:11 — Klive Humberstone (not verified)

£6.5m for 2010? He was only appointed in August/September 2010. Another good reason NEVER to bank with Barclays.

Mon, 2011-03-07 19:45 — Fruininut

He had the choice... take the money and live for now then rot in hell forever later...his kind are known for being rotten stupid bas*ards. !

Mon, 2011-03-07 20:08 — Lou (not verified)

George,

What do you make of the proposal to give RBS shares to all adults in the country with the conditions they can't be sold until a certain point and more importantly, is this a case of beware of the Condems bearing gifts?

Sun, 2011-03-13 21:08 — Eddy S (not verified)

atleast barclays didn't ask for a handout.

the scottish banks (RBS and HBOS) ended up getting them along with northern rock. part of me thinks this was because brown and darling wanted to help their own - no wonder fred the shred got a knighthood - he didn't get it for his folly investments in the property sector but because he was a so called scottish success story.

hopefully we'll make money from these companies when we sell our stakes.

Wed, 2011-03-09 18:00 — Morky (not verified)

Dominic Lynch Of Construction
08 March 2011 at 09:14
Well done Bob Diamond!

If the Banks don't make money, we don't make money! that's just the pecking order! Everyone needs to get over it and start enterprising

The point you seem to be missing is the fact that the banks were not making money. RBS made a huge loss in 2010.
Time for the ROBIN HOOD TAX...

Wed, 2011-03-09 19:01 — ang (not verified)

I just don't get it, it's so unfair and so obscene.

Mon, 2011-03-07 14:27 — Gordon Comstock1

This is outrageous and indefensible.
Even disclosing these payments is something the banks had to 'agree ' to. It is obvious who is calling the shots : unelected powerful banking chiefs and the City Corporation.
For what its worth my view prior to this announcement is at :
http://disparatestraights.blogspot.com
Meanwhile JSA is to be increased in April by £5 a week.

Tue, 2011-03-08 23:34 — Lox (not verified)

OK Steve, don't give them any business. Seriously-if enough people don't put money into Barclays, then they'll have to change their operations.

Wed, 2011-03-09 20:09 — Eddy S (not verified)

the robin hood tax would be a daft one if we were the only one imposing it. operations and teams can move very quickly in global institutions.

then again there's no reason why it can't be implemented globally including vitally the US, Switzerland and fast growing asian financial cities such as singapore and hong kong.

what we should realise is that bonuses paid in this country are taxed here and help pay our public services - there is no reason why financial workers cannot work in NY or Singapore.

one other thing to note is that we may end up making money on our stakes in the banks.

what we must do is ensure that banks don't invest in wild property booms - the gov't always turn a blind eye to this as it earns massive tax revenues - incidentally the era of cheap money will end soon when the chinese refuse to finance all our debts.