Just one day before their annual meeting with shareholders, it has been projected that one-fourth of the Barclay’s shareholders will protest current pay policies. As well, the bank will need an estimated £300 million to cover mis sold PPI (payment protection insurance) which will only add insult to injury.
Of particular note to shareholders is the exorbitant £17 million paid to Bob Diamond, the chief executive and the additional £5.7 million to cover his taxes when he came from the United States to take up his position. The Institute of Directors has stated that Barclays has a pay scale that is out of line and Diamond is refusing to comment on both the shareholders’ protest and statements made by the Institute.
It is predicted that other banks will need to follow suit in upping their PPI allocations. Many believe that HSBC and the Royal Bank of Scotland are next in line to increase the amount of money to set aside for PPI claims compensation. In terms of loss Barclays sustained, the amount has been estimated at £475 million pre-tax in statutory losses.
Even through all this, Barclays realised a 22% increase in profits which are said to be £2.4 million and this is actually much higher than anticipated. As a result, shares are up by 1.7%. According to Investotec banks analyst, Ian Gordon, the reason for this increase in value is largely due to performance of the Capital investment arm of the bank. In fact, revenues were 91% greater than the quarter before.
As the UK has been plunged into a double dip recession, the bank is sustaining losses in the eurozone. A good percentage of the losses Barclays sustained are due to its Spanish enterprises even though the amount lost has decreased over the previous quarter. Fallout from high pay and losses sustained through mis sold PPI are expected to be the highlights of tomorrow’s meeting.
