Bonus row as HSBC nets £14bn profit

HSBC racked up profits of nearly £14bn yesterday after a year in which its chief executive was handed a pay package worth more than £8m

HSBC
HSBC

HSBC racked up profits of nearly £14bn yesterday after a year in which its chief executive was handed a pay package worth more than £8m.

The pay-out for Stuart Gulliver and the bank’s revelation that 239 staff received more than £1m last year risked stoking anger over bank bonuses.

In addition, HSBC outlined measures that will see it sidestep new EU rules on bank bonuses by offering senior staff fixed pay allowances.

In the case of Mr Gulliver, his base salary will remain at £1.25m but he will receive a fixed pay allowance of £1.7m, to be awarded in shares on a quarterly basis.

It will not be tied directly to performance and so would not count as a bonus under new European rules preventing bankers from being paid bonuses worth more than two times their salary.

The controversial new rules from Brussels came into effect in January, meaning that 2013 was the last year in which big bonuses could be paid. Mr Gulliver’s previous pay scheme offered an annual bonus worth up to three times his salary, plus a longer-term share award that pays out as much as six times salary.

Chancellor George Osborne has filed a formal complaint against Brussels over the plans amid fears their introduction will drive up fixed salaries and increase the risk to financial stability. Other banks, including Royal Bank of Scotland, are expected to announce how they plan to tackle the Brussels rules in annual reports later in the spring.

But with HSBC also announcing its bonus pool for staff rose 6% to premise US$3.9bn (£2.3bn) last year, TUC general secretary Frances O’Grady said the results were “yet another example of soar-away boardroom greed”.

She added: “It would be great if banks put the same effort into lending to small businesses and investing in infrastructure as they do to getting round EU rules on boardroom bonuses.”

Shares in HSBC slumped by more than 4% after its profits of US$22.56bn (£13.6bn) rose 9% on a year ago but came in below City expectations. The banking group, which has more than 250,000 staff, said it was now “leaner and simpler” as a result of a three-year turnaround plan, which was launched by Mr Gulliver after he took the helm in 2011. Initiatives included the sale of 63 non-core businesses and a 41,000 reduction in its full-time headcount from 295,000.

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer