Barclays not to hire a new boss for its investment bank to save millions in salary and bonus pay
The decision will also help showing investors that Barclays is committed to reducing its wage bill Reuters

Barclays is set to end its search for a new boss for its investment banking division. The British bank had earlier sought to find a replacement for Tom King, its former chief executive of the investment division, who retired in February.

Instead, the bank is considering eliminating that position and transferring the powers of that post to a smaller group of senior managers. This would help the bank reduce its ranks at the top management. The move, which is also expected to save the bank millions of pounds in salary and bonus pay, comes at a time when the bank is witnessing a decline in its trading and fee income.

The decision will also help in showing investors that Barclays is committed to reducing its wage bill, which has been the subject of criticism for shareholders in the past. They had in particular complained about the size of bonuses paid. King, for instance, had received £3.8m (€4.78m, $5.38m) as bonus along with a share award of about £5m in the past. The overall bonuses paid by Barclays in 2015 were £1.67bn, of which £976m was to its investment banking employees.

John MacFarlane, chairman of Barclays, too had bemoaned its bonus culture in 2015. He had said: "If I had my own way... I would reward people at the end, once you know the results sometimes three or five years down the road."

The move also comes at a time when larger British banks are required under the ring-fencing rules to keep their retail operations separated from their riskier operations. In order to adhere to these rules, Barclays created Barclays Corporate and International (BCI), its new unit that will house many of its businesses such as fixed income trading, credit cards and payments.

According to sources, the bank now believes the presence of its BCI unit makes it unnecessary to have a position of chief executive for its investment bank. This is because the bank is of the opinion that the chief executive of BCI could now take charge of the investment arm, according to The Times.

Barclays chief executive Jes Staley, who is also serving as the interim head of its BCI unit, is known to be running Barclays investment banking division post King's departure. While he could continue the same considering his similar position at his previous company JP Morgan, he is understood to have wider commitments in running Barclays overall business. Hence, it is likely that a replacement could be announced to take over his investment banking responsibilities.