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At Barclays' annual general meeting, one investor questioned the suitability of Bob Diamond as chief executive
Barclays' bosses have been likened to Somali pirates and Marie Antoinette by private shareholders angry over the big bonuses for staff but smaller dividends for shareholders at a rowdy annual meeting.
As the bank reported a 9% fall in first quarter profits and a dramatic strategic U-turn on the Cayman Islands fund that managed its most toxic assets, Bob Diamond's suitability as chief executive was called into doubt by one investor concerned that he previously ran the bank's "gambling" arm, Barclays Capital.
The bank's shares were the second largest fallers in the FTSE 100, losing 4.75% to 287.2p, after the £1.65bn of profits disappointed investors.
One private investor, Trevor White, won applause after he moaned that his dividend payment last year was 20% of that he received before the crisis while the "high earners" were not sharing the pain. The bonuses were "obscene", he said, and he took exception to the use of the word "compensation" to describe pay and bonuses. Compensation is better used to describe payments for servicemen, death, injury or loss of job, he said.
Last month Barclays admitted five of its managers had shared a £110m payout and that Diamond was in line for a potential £27m. Some 231 so-called "code" staff – takers or controllers of risk – were paid a combined £554m in 2010 while the bank paid out £653m in dividends to shareholders.
David Hawker, describing himself as a former seaman, said that during a period of austerity the pay deals showed "the lack of wisdom reminiscent of Marie Antoinette saying 'let them eat cake'."
Another private investor, Martin Simons, concerned about the fall in lending to the manufacturing sector, criticised the board for behaving "like Somali pirates".
Marcus Agius, the bank's chairman, told the meeting: "We make sure we don't pay more than we need to pay."
Sir Richard Broadbent, chairman of the remuneration committee, was prevailed upon to defend the pay policies. "If we took our eye off the ball in terms of what it takes to compete globally, including for talent, then we could very quickly jeopardise the true rewards of our success," he told shareholders.
Agius refuted the description of BarCap as a gambling operation and argued regulators and politicians needed to agree "sensible regulatory architecture for the industry going forward".
He praised Diamond for his appearance before the Treasury select committee in January while Diamond admitted he had attended a "social dinner" with Lord Mandelson – who last year dubbed him the "unacceptable face' of banking – before the appearance. Mandelson also spent half a day at BarCap on Diamond's invitation.
Diamond quashed suggestions the bank was preparing to leave London because of regulations, particularly the report by Sir John Vickers.
"I want to assure you that Barclays has not had any discussion with US regulators or for that matter with regulators anywhere else in the world – about relocation. None … This is our home," Diamond said.
Before the meeting, the Association of British Insurers issued an "amber top" warning, alerting members to, among other things, two new pay plans – one which involves paying directors in complex new financial instruments known as contingent capital or "cocos", and another which made changes to performance criteria in a long-term incentive plan.
There were three separate votes on pay and while around one in 10 Barclays investors who voted failed to support the schemes, the level of disapproval from leading City investors did not match the sentiment in the hall – or outside, where protesters dressed in bowler hats and wearing blue masks from the World Development Movement claimed the bank was "profiting from hunger".
Barclays acknowledged it was "co-operating" with an investigation into the price-fixing of Libor, the London interbank offered rate from which loans around the world are priced. "It is currently not possible to predict the ultimate resolution of the issues covered by the various investigations, including the timing and the scale of the potential impact on the group of any resolution," the bank said.
Retail and business banking profits were up 21% at £692m, corporate and investment banking profits were down 29% at £983m and wealth and investment management profits were down 5% at £70m.
Barclays Capital suffered a fall in top-line income of 15%. Barclays Corporate recorded a profit before tax of £1m compared with a £75m loss although Spain remained a problem area.
The bank is paying a 1p quarterly dividend, as expected.
Toxic gold
A band of Barclays traders who left the bank in September 2009 are sharing a handout of some $260m as a result of the bank's decision to buy back a controversial Cayman Islands fund they manage. Barclays is buying back the fund, known as Protium, into which the bank poured its most toxic assets when the deal was done 18 months ago. About 45 traders left Barclays with high-fliers Stephen King and Michael Keeley to set up New York-based C12, which now employs 80 people. Barclays provided a 10-year, $12.6bn loan to enable the traders to buy the assets. Now the bank wants to regain control. The bank has reduced the term of the loan to June 2014 and is paying $83m to C12 to curtail the management contract, on top of an estimated $60m of fees for the last 18 months. C12 will receive $40m a year in fees – some $120m – until the loan expires. Barclays is also paying $270m to buy out other investors in Protium. Bob Diamond, Barclays chief executive, insisted it was not a "bad transaction".