Bonus cap row as HSBC profit rise disappoints
HSBC’S shares tumbled yesterday as soaring profits fell short of investors’ high expectations.
And the row over bank bonuses intensified as the lender confirmed it is paying staff new allowances in a bid to get around the EU’s bonus cap.
The bonus pool increased 6.3 per cent to $13.9bn for the year, with 239 staff receiving more than £1m each.
Chief executive Stuart Gulliver received a £1.7m allowance, on top of his £1.2m salary.
The allowance shows the beginning of a new system of remuneration.
The EU is capping bonuses at 100 per cent of salary, unless shareholders agree to a 200 per cent limit – something HSBC is asking investors to do.
That applies to all its staff around the world. As a result it wants to pay quarterly allowances, topping up staff’s salaries pay with shares, paid out over several years.
Influential MP Andrew Tyrie said this shows Europe’s cap on bonuses is damaging by forcing up short-term pay.
“A crude bonus cap does nothing to incentivise higher standards,” he said.
“[The Bank of England’s] Andrew Bailey warned the bonus cap, and schemes put in place in response to it, would make his job of promoting the safety and soundness of banks more difficult. It looks like he is right.”
Pre-tax profits rose nine per cent to $22.6bn (£13.6bn) for 2013. However, the bank’s fourth-quarter profit of $4bn was down 10.5 per cent on the same period of 2012.
Its shares fell 2.83 per cent on the day.