Bob Diamond, the chief executive of Barclays, is set to announce details of a new pay plan which will overhaul the way the bank pays its top bankers.
According to the Financial Times, Diamond plans to use a new type of bond—contingent convertibles, or Cocos—to pay a large portion of the bank’s highest-ranking bank staff.
Contingent capital, or Cocos, are bonds which convert into equity in times of stress and so are included in a bank’s capital reserve.
The report states Barclays has already approached the FSA with the proposal and is set to announce details of the pay plan in its annual results in mid-February.
The government, which is likely to welcome the move, has been using the Project Merlin initiative as a way of forcing banks to show restraint when issuing bonuses to their employees. (article continues below)
Chancellor George Osborne has also looked at the issue of bankers’ bonuses. He has been looking at ways to make the City pay more transparent than other financial centres by forcing banks to disclose the details of their top traders’ bonuses. It is understood an announcement could be made this week.
Barclays is also planning a review of its operations, which is likely to see job losses and increased pressure on under performing businesses, according to the report.