- Barclays is overhauling senior banker compensation, boosting bonuses and trimming fixed salaries to align with Wall Street norms.
- Performance pay surged nearly 30% to £1.3 billion in H1, while salaries edged up less than 1%.
- The bank expects an additional £100 million to £150 million in compensation costs in H2 as it expands bonus-heavy pay following the UK's removal of the bonus cap.
Barclays is shifting toward a Wall Street-style pay model for its senior bankers, emphasizing performance-based bonuses over fixed salaries. The move comes after the UK scrapped the EU-era bonus cap, giving banks more flexibility to reward top talent.
In the first half of the year, performance-linked pay jumped about 30% to roughly £1.3 billion, while base salaries rose less than 1%, according to people familiar with the matter. The bank anticipates incurring an extra £100 million to £150 million in compensation costs in the second half as it rolls out the new structure.
The changes reflect a broader realignment across UK banks, which are now competing more directly with US rivals for dealmakers and traders. "This is about retaining our best people in a highly competitive market," a Barclays spokesperson said. The bank declined to comment on specific pay packages.
Analysts note that the shift could increase cost volatility but may boost retention if deal activity picks up. "Variable pay aligns incentives with shareholder returns, but it also introduces risk-taking behavior," said one banking analyst. The move follows similar adjustments at other UK lenders, including HSBC and Lloyds.
Correction: An earlier version of this article misstated the timeline of the UK bonus cap removal. The cap was removed in October 2023, not earlier this year.