Anger as HSBC pays out £2.3bn in staff bonuses

The bank, which reported 2013 pre-tax profits of £13.6bn, also gave its chief executive Stuart Gulliver a pay package worth more than £8m.

HSBC said staff bonuses rose six per cent to £2.3bn last year.

The increase comes despite pressure on banks to rein in big bonuses that have been blamed for fuelling the risk-taking that led to the 2008 financial crisis.

TUC general secretary Frances O’Grady said the results were “yet another example of soar-away boardroom greed”.

“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.”

This followed HSBC’s admission that it has created measures that will help it to sidestep new EU rules on bank bonuses by offering senior staff fixed pay allowances.

Mr Gulliver said the bank plans to pay more than 600 of its top staff a new quarterly allowance, effectively increasing the amount of their fixed pay to meet new EU laws that cap bonuses at 200 per cent of salary.

Mr Gulliver will see his base salary stay at £1.25m and he will receive a fixed pay allowance of £1.7m, to be awarded in shares on a quarterly basis.

Unite national officer Dominic Hook said: “In the last year thousands of staff have been told their final salary pension scheme will be closing, giving savings for HSBC that are a drop in the ocean compared to these enormous profits.

“The news that hundreds of senior staff at the bank were paid massive salaries topping £1m and more will be hugely frustrating for staff working in call centres and branches up and down the country, who are working hard, often under great pressure to perform.”

HSBC is Europe’s biggest bank and its UK arm is estimated to be worth about £20bn. Much of its IT infrastructure is based in Sheffield.

Mr Gulliver said major shareholders supported the plan. He added that the EU rules made pay structures more complex and he hopes the UK Government will be successful with a legal challenge to the move.

“We had a compensation plan here that the shareholders liked but sadly because of the EU directive we’ve had to change. This isn’t something we would have wanted to do. It’s much more complicated,” he said.

The new rules from Brussels came into effect in January, meaning that 2013 was the last year in which big bonuses could be paid.

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.

HSBC said it has no plans to spin off and separately list its UK retail banking arm to meet new regulatory requirements.

HSBC’s £13.6bn 2013 profit rose nine per cent on the previous year, but fell short of analysts’ expectations.

The group warned of greater volatility in emerging markets this year.

HSBC, which is based in London but made two thirds of last year’s profit in Asia, has axed more than 40,000 jobs and sold or closed 60 businesses over the past three years to cut costs, but has not yet reached its cost efficiency and profitability targets.

Mr Gulliver is under pressure to show how HSBC can replace income lost from the sale of US businesses and a stake in a Chinese insurer, and worries that Asia’s economic growth is slowing.

He predicted China’s economy would grow by 7.4 per cent this year, Britain’s should expand by 2.6 per cent, the US by 2.5 per cent and western Europe by 1.2 per cent.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “The results were at the lower end of expectations, with difficulties in Latin America taking their toll. Some management efficiency targets were missed, hit by ongoing UK customer redress, whilst management’s irritation with the UK’s banking levy looks to have been expressed.”

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