In These New Times

Although the collapse of Woolworths came at a high cost to the company’s 30,000 workers, the six lenders to the retailer recovered all their money when the business was put into administration, the best possible result for Barclays’ shareholders.

However, disclosures about what some will regard as exorbitant payouts while banks go cap in hand to the Government for bailouts come only days after Gordon Brown and Lord Mandelson, the Business Secretary, urged banks to show restraint over compensation.

The payouts will also anger politicians who have tried to stem corporate bankruptcies. Baroness Vadera, Mr Brown’s closest adviser, contacted Barclays – one of the six banks that lent to Woolworths – to ask it to act responsibly before the retailer went into administration.

Lord Mandelson is also taking a keen interest in the fate of JJB Sports, another struggling retailer. JJB, which is backed by Barclays, HBOS and Kaupthing, the nationalised Icelandic lender, has only a week to convince its lenders that it is a viable business.

The Times has also learnt that Barclays Capital, the investment banking arm of Barclays, is hiring mergers and acquisitions bankers in London and is offering guaranteed bonus payments for at least the next year.

The continuing presence of a bonus culture within Barclays and the investment bank’s willingness to hire new staff on guaranteed deals threaten to draw the high street group into the escalating dispute over rewards for risk-taking. Banking sources said that Barclays was offering cash bonuses to recruit the best staff. Other sources familiar with the bank’s plans said that it was hiring in a “gradual and considered” way and would not be forced to overpay for expertise.

Barclays declined to be drawn on the terms of any deals it was offering. However, another banking source said: “Bonuses will be down a lot at Barclays this year, notwithstanding the bank’s performance.” On Monday, Barclays will report pretax profits for the year that are “well ahead” of £5.3 billion. The profits will also come despite gross writedowns of £8 billion for the financial year. The bank has chosen not to accept any rescue money from the Government.

Meanwhile, a former UBS investment banker will decide whether to approve millions in payouts to Royal Bank of Scotland (RBS) bankers. Colin Buchan, who has been an RBS director since 2002, became chairman of the bank’s remuneration committee yesterday as the group completed a boardroom shake-out.

Mr Buchan, one of only five independent nonexecutive directors to stay on at RBS, will replace Bob Scott, who was in charge of approving annual bonuses for last year.

Mr Scott, a former chief executive of CGNU, now part of the Aviva insurance group, was one of seven independent directors to be shown the door yesterday by Sir Philip Hampton, the new chairman, as the bank moves to distance itself from the culture of excess that has been a feature of its recent history.