HSBC 'expects to pay £1.2bn in bonuses'

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The Independent Online

Banking giant HSBC expects to pay about two billion US dollars (£1.2 billion) in bonuses this year, its chairman said today.







Douglas Flint told a Treasury select committee that a decision about bonus payments would be made in the next week or two but he gave a rough estimate of the size of the "bonus pool" across the global business for the first time.



Following widespread criticism of bankers' bonuses, Mr Flint also said that some investment bankers' pay had been increased using 150 million US dollars (£93.1 million) that had been taken from the bonus pool.



HSBC was this year due to carry out a review of where its business should be based and Mr Flint could not rule out the possibility that it would move its headquarters from London to Asia.



The bank carried out such a review every three years and this time one of the factors it would consider would be Chancellor George Osborne's £2.5 billion a year bank levy.



Other banks, including those that have been bailed out by the taxpayer, are in the process of deciding how much to pay their staff in bonuses in coming weeks.



Mr Flint said: "We have not yet determined how much it is going to be this year but it's around two billion.



"We should remember that the bonus pot is there to incentivise people to deliver against the objectives they were set at the beginning of the year, not just about profit."



He refused to say how many people in the bank were paid more than £1 million a year, but said he had no objection to disclosing the figure if the other banks also provided the same information.



He also pointed out that HSBC had paid the vast majority of its most senior staff in shares for the past couple of years, which helped to incentivise staff to avoid undue risk.



HSBC's annual report published in March last year showed that it paid three bankers more than £9 million each in 2009.



The chief executive at that time, Michael Geoghegan, donated his £4 million to charities to stave off public anger about pay in the banking sector.



Mr Flint also said that the Project Merlin talks, which aim to get the big five banks to agree to reduce bonuses and increase lending to small businesses, were "very very close" to reaching an agreement.



Mr Flint insisted that HSBC did not intend to move its headquarters abroad but said the bank would look dispassionately at the pros and cons of being based in London.



Its new chief executive, Stuart Gulliver, who took over at the start of the year, had decided to base himself in Hong Kong so he could be close to the rapidly expanding Asian markets.



Mr Flint said there was evidence that London had started losing some banking business to Singapore as companies were attracted by its more favourable tax regime.

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