Barclays bank bosses consider defying bonus crackdown and giving employees pay rises

Cutbacks: Taxpayer-funded Lloyds yesterday announced it will axe up to 5,000 positions in the UK in 2010 on top of thousands already slashed this year

'Taking these mitigating actions into account means there will be a net reduction of about 2,600 permanent jobs across the UK by the end of 2010,' the bank said in a statement.

'The group's policy is to use natural turnover and to redeploy people wherever possible to retain their expertise and knowledge within the group.

'Where it is necessary for colleagues to leave the company, it will look to achieve this by offering voluntary severance and by making less use of contractors and agency colleagues. Compulsory redundancies will be a last resort.'

Barclays and HSBC, which have avoided turning to the Government for state aid, gave hope that bad debts among recession-hit borrowers were starting to level off as they reported sharp quarter-on-quarter falls in impairment charges.

Barclays reported £4.54billion in profits for the first nine months of the year - down by nearly a fifth against a year earlier.

But the group said the result more than doubled on an underlying basis as it had enjoyed 'consistent profitability' so far in 2009.

HSBC added that, on a reported basis, its third-quarter figures were lower than a year earlier, with both banks being impacted by tightening in credit market spreads.

However, it too posted improving underlying figures as the two banking heavyweights began to put the troubles of last year's financial crisis behind them.

Concerns are mounting that the better results will see the return of excessive bank bonuses.

But Barclays and HSBC sought to assure that decisions have yet to be made on full-year payouts and will take current fears into account.

HSBC has already signed up to international G20 rules on pay reforms which recommend clawback clauses and deferral over a number of years.

Weathering the storm: HSBC reported results 'significantly ahead' in the quarter to September 30

The bank said it would pay 'appropriate' levels, 'at the same time being conscious of the environment in which we are operating'.

Bad debt levels are showing encouraging signs, according to both HSBC and Barclays.

HSBC has been hit hard by the so-called impairment charges and was the first of the banks to flag up the start of the credit crunch, given its huge exposure to sub-prime mortgage borrowers in the US.

But it said today that its bad loans fell to the lowest quarterly level since the second quarter of 2008.

Barclays said it believes impairments will now peak sooner than first thought, at the end of 2009 or first quarter in 2010 as the global economy begins to recover.

While it is still seeing the impact of bad debts and credit market writedowns, with impairments totalling £6.2billion in the first nine months, quarterly figures show a marked improvement on the beginning of the year.

The banks are likewise benefiting from bumper results in invesment banking as they take advantage of currency movements, interest rates and credit spreads.

HSBC said its global banking and markets arm was enjoying a record year.

Barclays said its Barclays Capital operation, which is led by president Bob Diamond, helped drive a 26 per cent leap in income to £23.8billion in the first nine months of 2009 - more than for the whole of 2008.

The bank is benefiting from a beefed-up BarCap in the wake of its takeover of parts of bankrupt US rival Lehman Brothers.

However, shares in the two banks saw mixed fortunes on the FTSE 100 Index as investors registered disappointment that BarCap's results were slightly weaker than hoped.

Barclays stock fell two per cent, while HSBC rose three per cent.

House prices rise for sixth successive month

House prices rose for the sixth month in a row during September, jumping by 1.2 per cent.

The rise pushed the average cost of a UK home up to £199,303, a level last seen in November 2008, according to the Department of Communities and Local Government.

The annual rate at which prices are falling also eased for the sixth consecutive month to 4.1 per cent, the lowest level for 13 months.

On the rise: The average cost of a UK home is now £199,303, a level last seen in November 2008

The figures came as the Royal Institution of Chartered Surveyors (RICS) said house prices continued to rise during October despite an increase in the number of homes being put up for sale.

The group said 34 per cent more surveyors reported seeing price rises rather than price falls during the month, the highest level since December 2006.

The increase reported by RICS came despite evidence that sellers are beginning to return to the market, with a balance of 15 per cent of surveyors reporting a rise in instructions, up from just five per cent in September.

The group said the number of people looking to sell their home rose in all regions of the UK for the first time since the credit crunch struck.

But despite this, the average number of unsold properties chartered surveyor estate agents had on their books remained broadly unchanged for the third consecutive month at 64.

Economists have attributed the recent strength of the housing market to a shortage of homes for sale and they have warned that, as more properties are put on to the market, prices could start to fall again.

But surveyors expect house prices to continue rising over the coming three months, with 31 per cent more expecting a rise rather than a fall in the value of property, up from a balance of 25 per cent in September.

RICS spokesman Jeremy Leaf said: 'Although the supply of property is beginning to pick up, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term.

'Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders.'

CLG reported a slowdown in the annual rate at which house prices are falling during September in all regions of the UK except Wales and Northern Ireland, while the rate remained broadly unchanged in Scotland and Yorkshire and Humberside.

Price falls continue to be slowest in Scotland, with the average value of a home dropping by just 0.9 per cent during the year to the end of September, while they are greatest in Northern Ireland at 18.3 per cent, up from an annual slide of 12.7 per cent in August.

The Government figures also showed that first-time buyers are now paying only 1.3 per cent less for a property than they were in September 2008, although the price of homes bought by former owner- occupiers is 5.2 per cent lower.

RICS reported a further rise in transaction levels in its survey, with the average chartered surveyor estate agent selling 19 properties during the three months to the end of October, up from 18.5 during the three months to the end of September.

But the rate at which potential buyers are registering with estate agents slowed down for the fourth month in a row.