European rules to cap bankers’ bonuses at twice fixed pay are “a retrograde step” that could add to difficulty in recruiting staff to the industry, the head of Europe’s biggest bank HSBC said yesterday.
Europe has said banks can only pay bonuses to staff equivalent to twice their fixed pay and last week said new ‘allowances’ introduced by many to meet the rules counted as variable pay, so would need to be restructured again.
Banks say changes already made would reduce risk-taking by staff, with bonuses to be paid in future years or potentially taken back.
“The proposals in terms of capping the ratio of variable to fixed (pay) is a retrograde step against long-term deferral,” Douglas Flint, HSBC chairman, said.
“Hopefully, we’ll find a balance over the coming months and years to readdress that, because it’s terribly important we have a balanced framework that protects the system from excessive risk taking, which deferral and clawback does, but at the same time isn’t so uncertain we find it difficult to attract people into the industry.”
Europe’s banking regulator has said it will issue more comprehensive guidelines next year.
Mr Flint said it can be difficult to attract people into the industry.
“When you say to someone in the tech industry you’d like them to join banks to help with cyber risk, and say your money will be paid in seven years’ time ... it’s an easy conversation – they decline to consider it,” he said.