Barclays bank ridicules UK government remuneration guidelines
Barclays Bank, or to be more precise 45 bankers from Barclays Bank, are set to ridicule the UK government's banking remuneration guidelines of the future. The 45 in question have set up a company in the Cayman Islands over which the UK government has no jurisdiction, in order to manage Barclays Bank's toxic debt. So what exactly is going on?
In a smart piece of financial wizardry, Barclays bank will lend the new management company $12.6 billion so that it can acquire Barclays bank's toxic debt of $12.3 billion. The basic setup for managing the debt will be $40 million a year and the ten-year agreement will bring a minimum of $400 million into the pot. This is a worst-case scenario because if Barclays Bank's toxic debt increases in value during the period then the payment to the management company would be even more.
Despite the fact that Barclays bank has refused direct government assistance, the company will still be part of the new remuneration guidelines for the banking sector. However, by smartly moving this company over to the Cayman Islands it will effectively circumnavigate the remuneration limits and put the UK government in a very difficult and very embarrassing situation.
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