|£50 banknotes. Photo: Images_of_Money. Used under Creative Commons license|
Rich Ricci, Jerry del Missier and Bob Diamond took home paychecks of $15 million or more from Barclays bank last year, continuing a tradition of excessive pay in the UK. Bob Diamond, the CEO, made just shy of $28 million (£17.7 million), while Jerry del Missier and Rich Ricci, co-heads of Barclays Capital, made $17 million (£10.8 million) and $15 million (£9.7 million), respectively.
Of course this pales compared to what U.S. hedge fund managers make - Raymond Dalio of Bridgewater Associates was paid an estimated $3 billion in 2011, Carl Icahn of Icahn Capital Management earned $2 billion. The top European hedge fund manager in 2011 was Alan Howard of Brevan Howard Asset Management, who earned $400 million last year. All told, the 40 highest paid hedge fund managers were paid a combined $13.2 billion in 2011, according to a Forbes magazine survey.
Such pay-outs make Goldman Sach’s vice president Greg Smith’s estimated salary of $500,000 look like pocket change.
The UK salaries have become public knowledge because of a pact made by the banking sector with the UK government, as part of Project Merlin signed in February 2011. The plan – named after the fictional wizard – was intended to boost bank lending for small businesses. The project has been a failure so far with lending falling every quarter instead.
Yet Project Merlin has been successful in revealing how well bankers are paid, often despite doing very badly for investors, he most scandalous revelation so far comes from the Royal Bank of Scotland (RBS), which received $70 billion (£45 billion) of taxpayer funds. Despite the fact that the loss-making bank is now effectively 83 percent state owned, RBS handed out shares worth almost $44 million (£28 million) to nine of its top executives in 2010. All told it paid out nearly $1.5 billion (nearly £1 billion) to its senior employees – even as it reported losses of $1.7 million (£1.1 billion) for 2010 and slashed pension payments to its employees.
Shareholders protested at the RBS annual meeting last April. "You should not be paying yourselves anything until the debt is paid off to the government and to the people," said one attendee, characterising the pay scales as "really obscene to the degree of greed and corporate theft."
And it's not just the average citizen who thinks salary levels are excessive. Three out of four financial workers in the City of London who responded to a survey by St Paul's Institute thought the wealth divide was too big.
In 2010, five of Barclays top managers also shared a payout of £110 million. That year, the bank's top two earners were also Jerry del Missier and Rich Ricci , who made over $15 million each last year. It needs to be noted that Ricci, del Missier and Diamond are not the highest paid people at Barclays. That distinction goes to company traders, whose salaries do not have to be revealed under UK rules (as opposed to bankers).
Perhaps one of the most curious facts to emerge from the banker’s pay scandals in the UK are the fact that some of the bankers are employed and paid outside the banks themselves. For example Stuart Gulliver, HSBC's highest paid banker, is not employed by the bank's main holding company despite taking over as chief executive but by a Dutch-based company called HSBC Asia Holdings. Part of his salary is paid into a Jersey-based defined contribution scheme called Trailblazer . And Bob Diamond, chief executive of Barclays, is seconded to the bank from a Delaware subsidiary known as Gracechurch. The banks say that there is no tax benefit to the arrangement.