Barclays needed to pay its top bankers bigger bonuses in order to avoid investment bankers quitting and sending the bank into a "death spiral", according to chief executive Antony Jenkins.
The Barclays boss made his stark warning as he defended the bank's decision to increase bonuses by up to £200 million in 2013, despite falling profits and up to 12,000 jobs being axed.
Jenkins insisted that the bank's decision to increase bonuses would be a "one-off" and would not be repeated if profits continued to slide. The chief executive said that he made the move in order to stop Barclays' investment bank from shrinking.
"People are less attracted to come to you, both clients and employees,” he told the Telegraph.
“You get into something of a death spiral. Your brand deteriorates and you can move very quickly from being a first tier player to one in the second or third tier if you don’t protect the franchise.
“I understand completely the sentiment from shareholders and broader society that it feels unreasonable, but if we are going to be a world-class investment bank then we have deal with the compensation structure as best we can.”
Barclays is expected to reveal in its annual report that the number of staff paid over £1 million has soared from 428 last year to between 475 and 500, with half based in America and a quarter in Britain.
Jenkins previously said that paying top staff big bonuses was in the "best interests" of shareholders.
He told the BBC Radio 4 Today programme: "The profits were down principally because we were taking a number of actions to reposition Barclays to become the go-to bank and we announced those actions a year ago.
"In terms of the compensation number, it is up 10% but at Barclays we have two principles around that number. The first is that we pay for performance and the second is that we pay competitively.
"We employ people from Singapore to San Francisco. We compete in global markets for talent. If we are to act in the best interests of our shareholders, we have to make sure we have the best people in the firm."Suggest a correction