Outrage as HSBC hands £2m bonus to chief Stuart Gulliver after fine in US
Two hundred are paid more than £1m despite sanctions-busting exposure
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 05 March 2013
HSBC handed its chief executive a £2m bonus yesterday as part of a pay and benefits package worth £7.4m, despite a year in which it was exposed as a conduit for drug money and sanctions busting.
The massive bonus sparked fresh outrage among campaigners who were aghast at the payment, given the damning indictment of the bank's activities filed by United States watchdogs, who imposed a record fine of $1.9bn (£1.3bn).
The bank also admitted that its chief executive Stuart Gulliver was among more than 200 people on packages worth more than £1m, some 78 of whom are based in Britain, although those figures were not in its 300-plus pages of regulatory filings.
By contrast to the losses reported by state-backed Lloyds Banking Group and Royal Bank of Scotland last week, HSBC did at least turn a profit and hiked its dividend by 11 per cent. But the pre-tax profits of $20.6bn were 6 per cent down on last year and well below City analysts' consensus forecast of $23bn.
The bank pointed out that its bonus pool had been cut by 12 per cent to $3.7bn and that payouts to staff were less than dividends. But critics argued that to pay out such huge sums after such a shaming year for the institution showed that little had changed in banking since the collapse of Lehman Brothers five years ago, which nearly precipitated financial armageddon.
The TUC said the payments should spur the Government into following Switzerland, whose citizens overwhelmingly backed plans for a crackdown on executive pay in a referendum.
Frances O'Grady, TUC general secretary, said: "The culture of entitlement is alive and well in the City. At a time when real wages are falling for the vast majority of people, the banking sector is continuing to hand out huge bonuses as if they were pocket change. The Government should be following the example of Switzerland and making a concerted effort to curb executive pay. However, George Osborne seems intent on preserving the status quo."
David Hillman, a spokesman for the Robin Hood Tax campaign, said: "It's beyond belief that in a year marked by dodgy dealings, 200 of HSBC's top brass are celebrating bonuses greater than many people earn in a lifetime. The only way to avoid the repeat spectacle of City excess is to ensure banks pay more in tax."
The five highest-paid bankers at HSBC share a total of £27.8m. Mr Gulliver, who has been streamlining the bank by selling or closing peripheral businesses, insisted that HSBC had made "considerable progress in 2012 despite a challenging operating environment".
Since laying out his three-year plan in May 2011, he has closed or sold 47 businesses, but the bank's report on his bonus achievements showed he missed targets on return on capital and cost efficiencies last year. Despite this he was praised for "strong leadership" and "personal behaviour" over the money-laundering scandal.
The chairman, Douglas Flint, said: "Banking has been given a huge wake-up call, and we are determined to play our part in restoring its reputation and thereby regaining society's trust."
Mr Gulliver said moves taken in the wake of the money-laundering and mis-selling scandals meant the bank is now spending an extra $500m a year on compliance and legal staff. The shares finished down 18p at 710p.
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