Barclays hands out £1.5bn in cash bonuses as bank's profits soar by 92% to record £11.6bn



Barclays hands out £2.7bn in bonuses after bumper profits



But bank's chief executive and president turn down payout



Six out of ten firms still being turned down for bank loans

Credit card interest soars to 12-year high

Inflation soars to 14-month high of 3.5%

Experts warn house prices facing second crash



Bankers at Barclays were handed a bumper payout of £1.5 billion in cash bonuses last year as the bonus pool doubled and the bank posted record annual profits, it was announced today.



The banking giant posted eye-watering profits of £11.6 billion for 2009 this morning- up a massive 92 per cent on last year.



These figures were buoyed by its investment banking arm, BarCap, where top investment bankers shared a bonus and pay pool of £4.5bn, almost double the previous year.

Just 23,000 of the firm's top investment bankers shared a bumper payout of £2.1 billion in bonuses with the average BarCap employee receiving a £95,000 payout.



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But while Barclays' results were good news for its bankers, they come as a survey showed that fat cat bankers are still refusing to give small businesses the help they need.

Business bosses are so starved of cash that they have been forced to borrow on their credit cards because banks are still refusing to lend them money.

Six out of ten firms were still being turned down for bank loans last year, according to a survey by the Institute of Directors.

Meanwhile another survey found that credit card rates are at 12-year high despite the interest rates being at a historic low.

The average interest charged on a credit card has soared to 18.8 per cent - the highest level since 1998. Some consumers now paying more than 40 per cent on the cash they have borrowed.

This morning official statistics showed that inflation rose to 3.5 per cent in January, well above the Bank's 2 per cent target.

Across the group as a whole, Barclays paid out £2.7 billion in bonuses - £1.5 billion in cash bonuses and £1.2 billion in long-term awards vesting over three years.



Almost three-quarters of these payouts were made in shares.



But chief executive John Varley and president Bob Diamond have sacrificed payouts in the light of the 'intense public interest and concern' over bankers' pay, Barclays said.

Shares in Barclays jumped by 8 per cent as the markets reacted to the better-than- expected results.



Other banks are set to follow with results over the next fortnight, and it is predicted that 10,000 City workers will walk away with pay and bonuses topping £1million each.



Barclays bosses Bob Diamond, left, and John Varley, right, have opted to forgo their bonuses despite record profits



But today's Institute of Directors survey makes a mockery of boasts by Gordon Brown and Chancellor Alistair Darling that the Government ordered the banks to start lending again as payback for pumping £850billion into the economy.

IoD director general Miles Templeman said: 'The fact that more than half of all businesses seeking finance last year were turned away by their banks is totally incompatible with the banking sector's position on the state of lending in the UK.

'What is even more concerning is that having been rejected, 83 per cent of businesses are not receiving information about alternatives available to them, including the Government's Enterprise Finance Guarantee.



'It seems that more businesses are turning to forms of unsecured finance, such as credit cards, to get them through their short-term spending needs.'

The IoD survey of 1,000 businesses is particularly significant because the Institute represents company directors who employ an average of 20 to 30 people - the very entrepreneurs whose desire to expand will be critical to creating jobs and dragging Britain out of recession.

The survey raised questions over the degree to which Labour has helped business get back on its feet.



Official figures show that just £2.4billion of a budget of £18.7billion earmarked for aiding cash-strapped firms has actually been spent.



There were 27,000 corporate insolvencies between the second quarter of 2008 and the third quarter of 2009, a record number in any British recession.

Economists and credit experts today warned that the UK housing market faces a second crash next year when banks are forced to start paying back the billions they borrowed from the Government at the height of the crisis.

Credit rating agency Moody's echoed fears raised by the Council of Mortgage Lenders that a sudden choking-off of credit will see mortgage costs soar and house prices tumble.



Prime Minister Gordon Brown and Chancellor Alistair Darling had said the Government had ordered the banks to start lending again

Shadow Chief Secretary to the Treasury Philip Hammond said: 'This research makes a mockery of Gordon Brown's claim to be giving real help now to businesses and to have extracted legally binding guarantees from the banks to lend more in exchange for taxpayer support.



'Thanks to his incompetence, more businesses have gone to the wall in this recession than in any other, while many more are being deprived of the credit they need to invest and create the new jobs we need for a sustainable recovery.'

The IoD survey also contradicts claims by the Treasury that lower lending figures are due to businesses not wishing to borrow cash to expand or develop during the economic downturn.

Surveys by the Department of Business, Innovation and Skills (BIS) have claimed that three out of four businesses got the money they wanted. But the IoD survey indicates that these figures are wrong.

Last week the Public Accounts Committee criticised the nationalised banks Royal Bank of Scotland and Lloyds Banking Group for failing to lend a total of £39billion by the end of this month - supposedly a legally binding commitment.

An IoD spokesman said that the performance of the banks nationalised during the financial meltdown is no better than that of their high street rivals: 'A lot of the people affected will be customers of the state- owned banks. Nothing I can see suggests they have done any better.'

Although Barclays, which doubled its profits in 2009, has not taken taxpayers' cash to rebuild its finances, it has indirectly benefited from taxpayer support to the struggling sector.









Liberal Democrat Treasury spokesman Vince Cable said the big banks should concentrate on lending, not bonuses.



'There is a huge gap between what the banks tell us and the experience of companies on the ground,' he said.



'Instead of paying themselves large bonuses, the money should be used to strengthen balance sheets and to provide lending to solvent British companies who have a vital role to play in our recovery.'

A Treasury spokesman said: 'Banks must do everything they can to lend to creditworthy businesses and support the recovery.

'The evidence shows that more lending is beginning to flow to businesses, but there is no room for complacency.

'As a result of the lending commitments, both Lloyds and RBS have made available more than £90billion in new lending since February, of which £50billion was loans to businesses.'