Barclays and the sack race 2

Last year Barclays bank made a large profit and celebrated by sacking thousands of staff (see Barclays and the sack race).

This year Barclays made even more profit - and so to celebrate will sack even more staff. Barclays adjusted pre-tax profits were £5.2 billion for 2013, that's £165 every second in profit. In a month that's £430 million.

The sack race

Barclays also announced that it will be sacking up to 12,000 people (including 7,000 in the UK). So assuming every employee to be sacked is on the average UK full-time wage of £26,500, Barclays could afford to keep every single one of them on for a year (including NI and pension contributions) from less than one month's profits.

As we said last year, no company should be able to make redundancies as long as it was profitable. After all, why should a company making profits be allowed to sack the workforce that produced those profits - simply to try to make higher profits for shareholders and to give ever larger bonuses to casino bankers?

Bonuses

But take a look at where the money is going. Before profits are calculated, Barclays will £2.38 billion in bonuses to its investment bankers - the socially useless parasites of late capitalism - a 10% increase on last year.

Instead of paying those bonuses (on top of above average wages) that £2.38 billion could pay for a golden goodbye of £200,000 to each of the 12,000 staff being sacked.

The Barclays model

But it won't. Barclays' the epitome of a nihilistic cannibal capitalism, that strips jobs, pay and dignity away from the many to give riches to the few. This is the gratuitous redistribution of wealth from poor to rich.

It also means customers will get worse service - those sacked staff will translate into few cashiers, fewer staff in call centres and possibly the closing of some high street branches.

• See also Ripped-Off UK looks for radical solutions

Barclays and KPMG involved in $660m tax ‘sham structure’

Prem Sikka

What are the chances that in the face of public criticisms, big business would curb its tax avoidance practices? Well, not much, as evidenced by a case decided by the US Court of Federal Claims.
Salem Financial Inc v United States relates to a complex financial transactions known as STARS (Structured Trust Advantaged Repackaged Securities). The case involved Salem Inc, a subsidiary of North Carolina based bank, BB&T.

The scheme was designed by Barclays Bank, a major UK financial institution; KPMG, one of the world’s biggest accountancy firms; and Sidley Austin, a US law firm. At the centre of the dispute is a tax liability of some US$660m.

Through collaboration with Barclays, KPMG specialised in developing transactions that took advantage of differences between international tax systems. Barclays marketed some versions of STARS to a number of corporations, including AIG, Microsoft, Intel, and Prudential. KPMG introduced the STARS transaction to BB&T at a January 17, 2002 meeting and used a slide show to outline the steps necessary for the scheme to work. KPMG had little prior business relationship with BB&T.

Contrived transactions

The key idea of the tax avoidance scheme was to generate large-scale foreign tax credits which could in turn be used to enhance revenue and reduce taxes payable by BB&T in the US. A series of transactions with circular cash flows were designed to create the tax savings.

The court noted that in essence the scheme called for BB&T to establish a trust containing approximately US$6 billion in revenue-producing bank assets. The monthly revenue from the trust was then cycled through a UK trustee, an act that served as a basis for UK taxation. Although the revenue was immediately returned to BB&T’s trust, the assessment of UK taxes generated tax credits that were shared 50/50 between Barclays and BB&T.

A US$1.5 billion loan from Barclays to BB&T was also part of the structured transaction, although the loan was not necessary to the objective of generating foreign tax credits. The Barclays monthly payment to BB&T represented BB&T’s share of the tax credits, and had the effect of reducing the interest cost of BB&T’s loan.

The main question for the 21-day court hearing was whether the STARS transaction had any purpose other than to generate tax savings, and if not, whether penalties should be assessed against BB&T. The 67-page court judgment found in favour of the government and the company has been ordered to pay US$680 million plus penalties of US$112 million.

After examining some 1,250 exhibits the judge referred to the scheme as “an abusive tax avoidance scheme” and said that the “conduct of those persons from BB&T, Barclays, KPMG, and the Sidley Austin law firm who were involved in this and other transactions was nothing short of reprehensible”.

The judge went on: “The professionals involved should have known better than to follow the STARS path, rife with its conflicts of interest, questionable pro forma legal and accounting opinions, and a taxpayer with a seemingly insatiable appetite for tax avoidance”. The whole STARS set-up was described as “a sham structure”.

Controversial pasts

Barclays and KPMG are no strangers to tax avoidance controversies. After lengthy investigations by the US Senate Permanent Subcommittee on Investigations and action by the US Department of Justice, KPMG were fined US$456 million for “criminal wrongdoing” in tax matters and a number of its former personnel were also given prison sentences. The firm has also been the subject of investigation of the UK House of Commons Public Accounts Committee, but this has not dulled its appetite for profits through the sale of tax avoidance schemes.

Barclays relies upon taxpayer guarantees for its core business, but operates a very lucrative tax avoidance business which is estimated to have generated around a billion pounds in fees each year between 2007 and 2010. Last year the UK government had to introduce emergency legislation to negate two avoidance schemes used by Barclays for its own business which could have deprived the UK Treasury of around £500 million. Despite fines and prison sentences major businesses remain addicted to tax avoidance. Public opprobrium has become just another cost of doing business.

It is time to shut down businesses who routinely pick citizens’ pockets through tax avoidance. Their schemes are undermining revenues that are much needed to revive the economy and provide education, healthcare, pensions, security and other public goods that distinguish civilised societies from the rest.

Yet the UK government continues to shower gifts on tax avoiders, KPMG continues to receive public contracts and Barclays is propped up by taxpayer-funded guarantees and loans. Only this week Ed Miliband hired KPMG’s deputy chairman for advice on low pay. Rather than giving them another consultancy job, politicians should be asking KPMG to explain the firm’s role in the erosion of social fabric.


This article first appeared on The Conversation website

Barclays and the sack race

Yesterday, Barclays announced it had made profits of £246 million in 2012, or just over £700,000 per day (or £8.14 every second of every hour of every day of every week of the year).

This was however down on 2011's looting when the bank made profits of £5.9 billion.However, when adjusted to remove fines over Libor rigging, PPI mis-selling and other scandals that have ravaged the bank, then its 2012 profits (on an adjusted basis) were £7.05 billion (or £224 per second).

The bank also announced a bonus pool of £1.85 billion (down 11% from 2011). The fall in profits and in bonuses though still large, excessive and exploitative are not enough.

So despite announcing these untold riches to be shared between shareholders and directors and other high fliers, the bank also announced that 3,700 staff will be made redundant - split roughly evenly between the retail business and the investment bank.

When I met with Jean-Luc Melenchon, the French Left Party leader, at the end of last year, he told me that one of his one his policy proposals was that no company should be able to make redundancies as long as it was profitable. After all, why should a company making profits be allowed to sack the workforce that produced those profits - simply to try to make higher profits for shareholders?

In the case of Barclays, their 2012 bonus pool of £1.85bn  would be enough to give each sacked worker £500,000 - more than enough to cover their wages. Barclays unadjusted profit of £246m would pay for 3,700 staff on average salaries of £66,000.

Now you might argue that such rules would be inflexible, especially in the case of a company that is trying to restructure - in the case of Barclays to restructure away from investment banking, and closing its tax avoidance unit, under considerable public scrutiny.

However, while voluntary redundancies could still be requested, what Melenchon's proposals would mean is that even when restructuring a company should offer alternative posts with re-training if necessary.

In fact Melenchon's proposals could be part of a modern full employment strategy, and would be a good way of preventing rising unemployment - something the OBR predicts we will see this year.

Durable change a long way off for scandal-ridden UK banking system

The role of Barclays bank in manipulating the London Interbank Offered Rate (LIBOR) continues to dominate international financial media.

The bank has already attracted fines from regulators in the UK and theUSA.
But further revelations are likely as US Senate Committees are flexing their muscles, the UK parliament has launched an inquiry and the UK’s Serious Fraud Office (SFO) has announced a criminal investigation. The temptation will be to look for scapegoats and prevent consideration of the systemic factors.

Barclays has a dark history. For example, in 2010, Barclays Bank paid US$298m in fines for “knowingly and willfully” violating international sanctions by handling hundreds of millions of dollars in clandestine transactions with banks in Cuba, Iran, Libya, Sudan and Burma.

In February 2012, the UK government introduced retrospective legislation to halt two tax avoidance schemes that would have enabled Barclays to avoid around £500 million in corporate taxes. However, Barclays is not alone. Only last month, the UK financial regulator reported that Barclays, HSBC, Lloyds and Royal Bank of Scotland mis-sold loans and hedging products to small and medium sized businesses. The financial sector has been a serial offender.

Here are a few examples.

The UK experienced a secondary banking crash in the mid-1970s. The crash revealed fraud and deceit at many banks. The UK government bailed them out and in turn had to secure a loan from the International Monetary Fund.

In the 1980s, the financial sector sold around 8.5 million endowment policies, which were linked to repayment of mortgages. The products were not suitable for everyone but were pushed just the same, and the risks were not explained to the customers.

A 2004 parliamentary report found that some 60% of the endowment policyholders have been the victims of mis-selling and face a shortfall of around £40 billion. This was followed-up by a pensions mis-selling scandal where 1.4 million people had been sold inappropriate pension schemes. The possible losses may have been £13.5 billion.

The 1990s saw the precipice bonds scandal. Around 250,000 retired people been persuaded to invest £5 billion in highly risky bonds, misleadingly sold as “low risk” products. Thousands of investors lost 80% of their savings. Then came the Split Capital Investment Trusts scandal. Once again financial products had been mis-sold and deceptively described as low risk. Some 50,000 investors may have lost £770 million.

New millennium came with a new financial scandal – the payment protection insurance (PPI) scandal. People taking out loans were forced to buy expensive insurance, which generated around £5.4 billion in annual premiums for banks and provided little protection for borrowers. This scandal is still being played out and banks may be forced to pay £10 billion in compensation.

The above has been accompanied by money laundering, tax avoidance, tax evasion, fraudulent practices to inflate share prices and of course the banking crash, which has brought the global economy to its knees.

Whichever way you look at it, banks have been serial offenders and continue to act with impunity. The entrepreneurial culture of making private profits at almost any cost has had disastrous social consequences. Fines and forced compensations have just become another business cost and the usual predatory practices have continued.

There are two main drivers of the financial scandals. Firstly, markets exert incessant pressures for ever rising profits and don’t care much whether they come from normal trade, money laundering, tax avoidance and other dodges. Secondly, the idea of assessing people’s worth through wealth is deeply embedded in western societies.

Profit-related pay became the mantra from the 1970s onwards and has been a key driver of the abuses. The typical tenure of a FTSE 350 companies CEO is around four years and declining. In this time, people at the top need to collect as much personal loot as possible and have little regard for any long-term consequences. The performance related pay applies at the lower echelons as well and again encourages short-termism and neglect of any social consequences.

In principle, regulators and politicians should be able to able to check the abuses, but the UK political institutions are weak. There is little competition amongst the political parties to devise socially responsible policies.

For the last 40 years, they have all offered various shades of light-touch regulation and veneration of markets. There has been no attempt to alleviate market pressures by forcing banks to operate as cooperatives or mutuals. Corporate and wealthy elites fund political parties and have organised effective regulation and accountability off the political agenda.

The regulators of the financial sector come primarily from the same industry and have sympathies for the narrow short-term interests of that industry. After a stint as a regulator, they then return to the same industry. The revolving-doors and ingrained conflicts of interest have prevented effective regulation and accountability.

Reforming political institutions is a necessary condition of controlling banking frauds, but a durable change is not on the horizon.

Nude rambling, Barclays and moral hazard

In February this year, Leeds Magistrates Court fined Nigel Keer (pictured left) £315 for rambling through a popular beauty spot naked except for a backpack, boots and a baseball cap. (Read report here)

Why do I mention this case? And what on earth has it got to do with Barclays? (apart from an amusing link to 'moral hazard')

Well, the penalty handed down to Mr Keer for a minor public order offence (he provoked an onlooker to frown!) is tougher than the fine handed down to Barclays.


Barclays was handed a fine of £290 million on Wednesday for its role in conniving to fix the LIBOR rate (the interest rate used for inter-bank lending) as you may have seen (if not, a reasonable article here). 


So how is the £315 Mr Keer was fined more than the £290m Barclays fine ?


Well, the BBC's Paul Lewis tweeted this morning that Barclays fine was just ten days' profits for the banking behemoth.


So, assuming Mr Keer is an average earner, then his 10 day 'profit' (his disposable income after tax) is £205 - as the Telegraph reports that the average disposable income is £144 per week.


So there we have it, wandering scantily clad around the hills of the Leeds hinterland is worse than international banking fraud. 

Still the unacceptable face of financial capitalism

Barclays Bank’s grim reputation for a predatory approach to business is undiminished, says Prem Sikka

The banks have got it made. They have ripped off people with exorbitant charges and measly returns on savings. They have picked people’s pockets with the mis-selling of payment protection insurance, endowment mortgages, personal pensions, precipice bonds and split capital investment trusts – to name just a few.

Banks have driven up the price of food and commodities through speculation, a major cause of commodity inflation. The state has guaranteed their profits through the Private Finance Initiative and the channelling of pensions and benefit payments through bank accounts. The taxpayer has bailed out banks through loans, subsidies and guarantees that add up to more than £1 trillion. Yet, in return, the banks cannot be relied on to pay democratically agreed taxes.

Barclays Bank is the latest example of the unacceptable entrepreneurial culture where bending the rules to avoid taxes and boost corporate profits is considered to be a skill. In 2009, Barclays paid £113 million in corporation tax to the United Kingdom – about 2.4 per cent of its £4.6 billion global annual profit.

Now the British Government has announced that Barclays tried to avoid £500 million of tax through two novel schemes. The first was designed to ensure that the profit arising to the bank from a buy-back of its own debt is not subject to corporation tax.

The second bit of alchemy was a scheme to convert non-taxable income into an amount carrying a repayable tax credit in an attempt to secure “repayment” from the Exchequer of tax that has not actually been paid. The £500 million that Barclays sought to avoid is equivalent to the cost of 100 new primary schools, or employing 16,000 nurses. Yet Barclays and its tax advisors were not bothered about the social consequences. The bank’s defence was that other corporations are also doing the same and it has not broken any laws.

Each year, Barclays publishes what it calls a Citizenship Report and claims that it is a socially responsible organisation. In 2008, soon after the banking crash, Barclays’ chief executive Bob Diamond publicly said that, in future, banks would be good citizens. In November 2010, major banks, including Barclays, signed the Government’s Code of Practice on Taxation and promised that “that banking groups, their subsidiaries, and their branches operating in the UK, will comply with the spirit, as well as the letter, of tax law” and “not undertake tax planning that aims to achieve a tax result that is contrary to the intentions of Parliament”.

All the promises have been broken and show the folly of relying on voluntary codes. The Government will collect the £500 million in tax, but there are no penalties for violating the Code of Practice, which was lauded by Prime Minister David Cameron as a step towards “responsible capitalism”.

Barclays is no stranger to controversy. Last year, the World Development Movement estimated that Barclays generates a profit of around £340 million a year through food speculative activities, a major cause of hunger around the world. Barclays and 15 other banks are being investigated by the European Commission to ascertain whether they have colluded and/or may hold and abuse a dominant position in order to control the financial information relating to credit default swaps, which are complex financial instruments used to manage risks.

In April 2011, Liberal peer Lord Oakshott urged the government to investigate Barclays over the $12.3 billion (£7.4 billion) sale of toxic assets to a Cayman Islands company. The company was called Protium and was founded with a $12.6 billion loan from the bank. The deal had the potential to enable Barclays to avoid millions in taxes and a headline in the Daily Telegraph screamed ”Barclays’ Protium deal is all that’s wrong in the City”. Barclays is thought to have 174 subsidiaries and ventures registered in the Caymans, a place that does not levy any corporation tax and is known for lax regulation. The extent of speculative and tax avoidance activity routed through tax havens is not known.

Barclays and other multinational corporations indulge in tax avoidance for two main reasons. First, stock markets exert incessant pressures on corporations to report higher profits. Rather than competition, innovation, investment, better services to customers and communities, many companies find it easier to boost profits through tax avoidance. Second, this suits executives as their remuneration is linked to profits. Barclays’ chief executive Bob Diamond has been receiving mega-bucks in salary and bonuses, but there is silence on the extent to which they are financed by tax avoidance.

Tax avoidance enriches few and impoverishes many, but banks do not publish any meaningful information about their indulgence in tax avoidance. The annual accounts do not provide any indication of the profits boosted by tax avoidance schemes. Neither do they provide any information about the sales, profits, employees and taxes for each country of their operations.

Such information would show that subsidiaries in tax havens do little trading, have skeletal staff but somehow report huge profits, or that large amounts of revenues are generated in the Britain, but corporate taxes are avoided. This information would help to focus attention on the artificial shifting of profits, but successive governments have done nothing to create this transparency.

Organised tax avoidance affects us all. Democracy, responsibility and accountability should be mobilised to check it. All corporate tax returns and related correspondence should be publicly available so that we can all check corporate claims of social responsibility and good citizenship. The threat of public sunlight has the potential to check selfish impulses.

At the moment, there are no personal consequences for directors indulging in complex tax avoidance schemes or for accountants crafting complex avoidance schemes.

Many of the avoidance schemes have been declared to be abusive by the courts, but still there is no retribution against directors and accountants. The lack of penalties has created a gaming culture which drains the public purse. Legislation should be enacted to make directors and designers of abusive avoidance schemes personally liable for up to 10 times the amount of tax involved. The prospect of personal costs would provide some food for thought.

This article first appeared in Tribune

Bringing down the banks - from Cantona to Wisconsin

A few months back a rambling interview with former footballer Eric Cantona ignited a campaign called StopBanque. In the video Cantona says

"We don't pick up weapons to kill people to start the revolution. The revolution is really easy to do nowadays ... The system revolves around the banks. It's based on the power of the banks so it must be destroyed starting with the banks ... The 3 million people with their placards on the street, they should go to the bank, withdraw their money from the banks and the banks collapse."

The interview went viral and a date was sent in France (with smaller campaigns elsewhere) for people to withdraw their funds from the banks: 7 December. It had little or no effect. While superficially appealing to many (otherwise it wouldn't have gone viral), it gave rise to many practical questions: the main one being, 'then what do I do with my money?'

Most people whether super-rich or of modest means are naturally cautious about all their worldly wealth being kept under the mattress. If you're asking people to boycott all banks where do they put their money?

But could successor campaigns get the formula right? Following the exposure about their low corporation tax payments, obscene bonuses and offshore subsidiaries, there have been demands all over the blogosphere and twitter to boycott Barclays. This leaves people the option of turning to another bank - and would act as a warning to others, 'you could be next, we're watching you'. There's no evidence though yet that this is happening.


For evidence of success though, see Wisconsin, where the firefighters union asked union members to withdraw their money from M&I Bank. The bank's executives and board members were among the highest donors to Governor Scott Walker's election campaign.

The response has been impressive, with union members withdrawing hundred of thousands of dollars, forcing the bank to close its doors at 3pm yesterday and issue a desperate statement distancing itself from the donations of its executives and board.

Could a similar message go out from unions here? 'Collaborate with the coalition government and we'll boycott you'.

Whether it's political donations, capital flight, currency speculation or outright capital strikes, capital has always been ruthless in applying political pressure.

If we want to curtail their political power, why not bring one down - it would build a huge amount of confidence and be a warning to others - Wisconsin might be showing the way and King Eric might approve too.

Top Tax shirkers - HMRC makes its case

The Guardian today reports an amazing story today. The much debated 50% top tax rate, which came into effect in April 2010, has raised precisely £0 so far.

Why's that (i hear you ask)? Has Will Hutton's Pay Commission enforced that no one should earn over £150,000? Don't be silly. Has the right-wing media prediction that all talent (aka overpaid people) will leave the country come true? No.

In fact, the reason the new 50p tax band has raised not a penny is because HM Revenue & Customs only had one year to adapt its computer system to collect the tax. Apparently that is insufficient time. Seriously.

HMRC has written out to 24,000 people affected by the new tax rate. The letter reads:

"Although the new rate started in April 2010, you may be aware that you are only being taxed through the Pay As You Earn (PAYE) system at 40% on some of your jobs or pensions, rather than at 50%. We were unable to introduce the changes needed to PAYE to collect the 50% rate from people who had more than one job or pension for the tax year 2010/11. This is because the start date was brought forward a year to April 2010 by budget 2009."

Corporation Tax is being reduced to 27% within a year, then 26% then next year, 25% the year after that and 24% the following year. I'm not a gambling man, but I'm willing to bet there's no delay in adapting systems to reduce tax for big business.

Mark Serwotka, the general secretary of the Public and Commercial Services union, which represents workers at HMRC, said:

"It defies belief that HMRC wasn't able to get its computer system geared up for this and it now means high earners will be getting away without paying their dues while ordinary taxpayers face a VAT rise and cuts in public services.

"It also effectively gives the wealthiest taxpayers time to limit their tax liability, which would just add to the tens of billions of pounds that is avoided, evaded or uncollected every year. After a succession of embarrassing episodes, senior management need to get a grip and the government must see there is an alternative to cuts that have been so damaging to the department."

The PCS website also puts the case for Barclays and KPMG today - and there's every reason to vote for either of these facilitators of 'tax shirking'.

You can also vote for HMRC at: http://falseeconomy.org.uk/tax/hmrc. I just have - because the cuts in HMRC are the biggest gift to corporate and super-rich tax avoiders.

Bank bonuses the symptom not the cause

The sight and sound of Barclays CEO Bob Diamond running rings around a committee of Westminster MPs should bring an end to the ideas that bankers’ bonuses can be controlled, that the financial sector can be regulated, or that the worst excesses of capitalism can be reined in.

These are the ideas that have sustained the economic and political debate since the crisis blew up in 2007. Those tied to the for-profit economic model, which includes most parliamentarians, took their cue from rafts of self-styled “economists”, analysts, commentators. They had in various ways blamed the removal of regulation during the Thatcher/Reagan years for the gaseous balloons of dodgy credit that enveloped the world during the globalisation decades.

Of course, the chorus of disapproval only started when the burden of mortgage and credit card debt became unsustainable and the payment defaults detonated the balloons’ volatile contents. Until then, the world was in thrall to New Labour’s friends in the City, and the Blair/Brown triumphalism that trumpeted “the end of boom and bust”.

Diamond is pretty much the apotheosis of spokespersons for the capitalist class and he wasn’t pulling any punches when he said that the time for “remorse and apology” was over. In asserting that banks should be allowed to fail, he issued a sharp slap in the face for the whole process of bailing them out in the first place.

This led governments and central banks around the world to massively expand their debt and pass the responsibility for repaying it on to their unwilling and increasingly unruly populations, their children and their children’s children, if the system is allowed to continue.

And if banks should be allowed to fail, so, it seems, should the countries who’ve tried to bail them out, or have been caught up the global debt tsunami. Portugal is in line to follow Greece and Ireland.

Philip Augar, author of The Greed Merchants: How the Investment Banks Played the Free Market Game puts it as clearly as you could want:

High bonus payments are a symptom of a problem, not its cause. The banking settlement was deficient because it did little to address the asymmetries in the universal banking business model. This model causes investment banks to jeopardise global financial stability in bad times whilst allowing bankers to cream off film star compensation in the good times. The global reforms have done a bit to improve financial stability but almost nothing to constrain the profitability that produces the bonuses. That profitability arises from a business model that gives banks in general and investment banks in particular the best possible view of global economies and markets. They are able to use this information advantage to load the dice and generate super-profits. This is where the bonuses come from and this is why the banking lobby worked so hard and so successfully to defend the model.

The “business model” Augar is talking about is profitability. So now is the time to ask the question of questions: why do we need to organise the whole of society around the for-profit business model? The spectacular failures of the last three years are signs of a system at the end of its days.

Rather than trying to prop it up, at an unbearable cost to billions of ordinary people, we must put it behind us, setting our minds to the future of a society that produces for the needs of everyone, not the bonus-yielding super-profits for a few. That is the agenda for a global network of People’s Assemblies.

Gerry Gold
Economics editor
http://www.aworldtown.net/
12 January 2011

Economists reveal Barclays bosses' greed

From today's Morning Star
by Lizzie Cocker

Left economists have derided a bid by top Barclays chiefs to defuse public anger over the banking crisis by waiving their own bonuses - pointing out the firm's president was already sitting on a £22m share deal.

After reporting higher than expected profits of £11.6bn for 2009, Barclays announced its bankers would be rewarded with £1.5bn in cash bonuses and £1.2bn in long-term awards.

However for the second year running chief executive John Varley and president Bob Diamond said they would not take part in the cash bonanza.

The Left Economics Advisory Panel (LEAP) stepped in on Tuesday to slam Mr Diamond over the millions he has earned from selling shares in Barclays Global Investors.

A LEAP spokesman said: "The hubris around the supposed modesty of Bob Diamond in refusing his bonus is somewhat undermined by the fact that he received £22m in share sales this year on top of his alleged eight-figure salary."

The average bonus at the bank's investment arm BarCap was £95,000, while elsewhere in the company bonuses were around £19,000.

And it is predicted that as other banks announce results over the next fortnight 10,000 City workers will rack up pay and bonuses worth over £1m each.

The LEAP spokesman said the massive profits and bosses highlighted "the failure of governments to change the culture of the banks."

Mr Varley said he had reduced the bonus pool to pay for the government's 50 per cent tax on bonuses over £25,000.

Barclays alone handed over £225m to the government out of a £550m sum Chancellor Alistair Darling expected the tax to raise from all banks.

But some pundits argued that more public finances could be raised through a transaction tax which would enable the taxpayer to see a share of Barclays gross assets of £1.4 trillion.

Communist Party of Britain general secretary Rob Griffiths asked: "How can it be right that a banker speculating with other people's money can receive more in annual bonuses than a hospital porter or a bus driver can earn in a decade?"