A guide directs shareholders to the Barclays AGM as protesters demonstrate in central London yesterday. Barclays said its first-quarter profit fell after a “significant” drop in revenue from its investment bank’s fixed-income operations.

More than a third of Barclays’ investors declined to back its pay policy yesterday, tipping the British bank into an open row with one of its biggest shareholders.

In a rare gesture of public opposition, Standard Life said it had voted against Barclays’ decision to pay out £2.4bn in bonuses for 2013 — a 10% increase on 2012 despite posting profits a third lower.

“We are unconvinced that the amount of the 2013 bonus pool was in the best interests of shareholders,” said Alison Kennedy, governance & stewardship director at Standard Life, which has a 1.9% stake in Barclays. The decision had damaged the bank’s reputation, she added.

The vote, while a slap in the face for the bank, means it can still go ahead and pay staff bonuses worth up to twice their salaries. Overall 24% of shareholders who voted opposed its remuneration report. Including withheld votes the share of investors failing to back its pay policy was 34%.

The head of Barclays’ remuneration committee John Sunderland said Standard Life — the bank’s sixth largest shareholder — should have raised its concerns earlier in private discussions it had over pay.

Chairman David Walker told reporters: “There was a bit of irritation that some of the concerns (Standard Life) expressed, they didn’t express at an earlier stage... When you get a broadside at a late stage in the process it may be too late.” Walker said Barclays’ pay plan was the right decision, in order to halt an exodus of senior staff. Last year the bank lost people in its US investment bank arm that were critical to its development, he said, because it had cut bonuses too sharply in 2012 and last year US rivals had increased pay by at least 15%.

In the middle of last year Barclays’ profitable US bond trading desk faced losing its co-heads and more than two-thirds of the senior team, Walker said, while overall the resignation rate for senior Barclays employees in the US almost doubled in 2013.

“It would not have been in the interests of shareholders if significant parts of the investment bank were allowed to wither on the vine because we had lost and failed to replace significant teams of people, in particular in the US last year,” Walker said.

But other shareholders were unconvinced, saying pay levels did not reflect current performance.

“We’re paying for Manchester United but we’re getting Colchester United,” said Phil Clarke, a private shareholder.

Barclays’ pay decision adheres to new European Union rules limiting bankers’ bonuses, but may prompt closer scrutiny from the UK government.

British Business Secretary Vince Cable this week wrote to banks and other big companies warning them to rein in excessive executive pay or face tighter rules. His said banks, and Barclays in particular, needed to address “dangerous levels” of pay.

Barclays said its first-quarter profit fell after a “significant” drop in revenue from its investment bank’s fixed-income operations, extending an industry slump across that business.

A cost-cutting programme was starting to show a “material benefit”, however, and would help offset the drop in investment bank profits, the bank said.

Barclays said it would report a “small reduction” in adjusted pretax profit compared with a year ago when it publishes first-quarter results on May 6.

Barclays’ chief executive Antony Jenkins is reviewing the size and shape of Barclays’ investment bank and will unveil details of his plan on May 8. He is expected to axe thousands of jobs to cut costs and improve returns.

Tougher regulations have made many areas of investment banking less profitable. Many bankers and analysts say the drop in fixed income, credit and commodities (FICC) revenues is permanent and banks need to take more aggressive action to shrink their businesses.

US rival JPMorgan reported its FICC revenues fell 21% in the first quarter from a year ago, while Goldman Sachs reported an 11% drop and Citigroup posted an 18% fall.

Barclays could cut as many as 7,500 staff, mainly by shrinking its European fixed-income business, Bernstein analyst Chirantan Barua estimated this week.

Barclays said its equities and investment banking advisory businesses in the first quarter performed broadly in line with a year ago.

Barclays shares were up 1.2% at 251.8p by 1515 GMT, outperforming a slightly higher European banking index.