£11.6bn profit, but top two at Barclays refuse bonuses

Two of the highest-paid bankers in the world have refused their bonuses - despite a 92 per cent rise in profits, and even though their bank has never been bailed out by the taxpayer. Announcing record profits of £11.6bn this morning, Barclays said that although it would pay a total of £2bn in bonuses to its 23,000 investment bankers, the two men at the top would not take their shares.

John Varley and Bob Diamond are, respectively, chief executive and president of Barclays. Once dubbed the bank's 'odd couple' for their contrasting backgrounds and styles, they have overseen a Houdini-like escape for Barclays, which looked as though it might collapse altogether just 13 months ago. The bank's chairman Marcus Agius said yesterday the two men deserved bonuses, but were not going to take them.

Varley and Diamond (above left and right respectively) are declining the payments, Agius said, "out of consideration of the continued impact of the economic downturn on many clients, customers and shareholders, combined with the fact that banks and bankers' pay remain matters of intense public interest and concern".

In just one week in January 2009, Barclays stock halved to 88p, then fell again the next week to 51p as jittery investors feared Barclays might go the same way as RBS, which announced the UK's highest-ever loss that month. But the bank weathered the storm, with a combination of good judgment and nerve, although some rivals would say the biggest part was played by good luck. One banker told the Daily Telegraph the bank was "keeping just inches in front of the tidal wave the whole time".

Big earners and big personalities, Varley and Diamond also decided to forego their bonuses last year in a show of unity designed to restore public confidence in Barclays. Yet when Varley was first made Diamond's boss in 2003, some predicted Diamond, who had also put himself forward for the top job, would quit within months.

The two men could scarcely be more different: Varley is an establishment figure, a tough but reserved Englishman with a dynastic connection the bank, while Diamond is an ebullient American, a former all-state linebacker who was a university lecturer until 1979, and still enjoys public appearances.

But there were some critical voices raised against Barclays, despite the two executives' self-abnegation. Vince Cable, the Lib Dems' economic spokesman, pointed out that the bank may not have been bailed out, but its risks were still underwritten by the UK government. Calling for a levy on bank profits, he told the BBC: "If things go wrong [for Barclays], and they came perilously close to going wrong about 18 months ago, it's left to the British taxpayer to bail them out."

Some observers still feel the bank's £2bn pay-outs to other staff are excessive, but there is a downward trend: 38 per cent of revenue at Barclays Capital is being paid to staff, compared to 44 per cent last year. Diamond indicated this trend would be the "direction of travel" for the future. ·