- 2013 profits up 9% on previous year but rise was below expectations
- Boss Stuart Gulliver's pay package rose from £7.5million to £8million
- Bonus pool up 6% in a year to £2.3billion, with 239 receiving £1million+
Global banking giant HSBC was accused
of 'soar-away boardroom greed' today as it revealed plans to swerve an
EU cap on huge bonuses.
Bank boss Stuart Gulliver saw his own pay package jump to just over £8million, from £7.5million the year before, as the bonus pool across the bank jumped 6 per cent to £2.3billion.
The bank’s revelation that 239 staff received more than £1 million also risked stoking anger over bank bonuses.
The EU wants to restrict banks to paying bonuses no more than one year’s annual salary, rising to twice salary if shareholders approve.
Banks have been formulating plans to dodge the cap, which they claim will cause them to lose staff to US and Asian rivals which do not have any pay restrictions.
The UK Treasury has also launched a legal challenge against the pay curbs.
Yesterday Gulliver, described the bonus cap as ‘unfortunate’ and confirmed it would be applying to shareholders for the higher limit of twice annual salary.
His own package jumped to just over £8million, confirming him as the highest paid bank boss in the UK, with bosses at Barclays and Royal Bank of Scotland both waiving their bonuses for last year.
Cathy Jamieson, Labour's shadow Treasury minister, said: 'We're once again seeing bumper pay-outs with bonuses up this year at Lloyds, Barclays and now HSBC.
'The government should be repeating Labour's successful bank bonus tax this year. This could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits.'
TUC general secretary Frances O’Grady said the results were 'yet another example of soar-away boardroom greed'.
She added: '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.'
HSBC said Mr Gulliver's base salary will remain at £1.25million for this year but that he will receive a fixed pay allowance of £1.7million, to be awarded in shares on a quarterly basis.
Mr Gulliver’s package will not be tied directly to performance and so would not count as a bonus under new European rules preventing bankers from being paid bonuses worth more than two times their salary.
The controversial new rules from Brussels came into effect in January, meaning that 2013 was the last year in which big bonuses could be paid.
Mr Gulliver's previous pay scheme offered an annual bonus worth up to three times his salary, plus a longer-term share award that pays out as much as six times salary.
The lender also warned there could be greater volatility in emerging markets this year as they adjust to changing economic circumstances, helping send its shares over 4 per cent lower in mid-morning trade, down 30.5p at 623.7p.
HSBC makes an estimated 90 per cent of its money outside Britain and has benefited from its exposure to emerging markets in Asia.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: ‘Against a backdrop of concern for slowing growth in the Emerging Markets, cautious near term management outlook comments have impacted.
‘The results were at the lower end of expectations, with difficulties in Latin America taking their toll. Furthermore, 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.
On the upside, broad progress was made, with underlying pre-tax profit higher in three of its four global businesses. Costs continue to be cut and remain a firm focus, whilst expected long term trends, such as growing trade across the Emerging Markets, appears to support underlying management confidence.‘
HSBC also confirmed today that the number of millionaires on its pay roll continues to
climb. Some 239 HSBC staff received packages of £1million or more last
year, up from 204 in 2012 and 192 in 2011.
Mr Gulliver took the helm in 2011 and has led an extensive overhaul of the business.The lender was among those that did not need a taxpayer-funded bailout in the banking crisis.
‘For now, and having entered the credit crisis in better shape than most rivals, the bank remains a core sector investment. A progressive dividend policy continues to be pursued, whilst the bank’s avoidance of government ownership leaves it free of a major distraction compared to some rivals. In all, and despite the worry of Emerging Market exposure, analyst opinion continues to denote a buy,’ Keith Bowman said.
Bank boss Stuart Gulliver saw his own pay package jump to just over £8million, from £7.5million the year before, as the bonus pool across the bank jumped 6 per cent to £2.3billion.
The bank’s revelation that 239 staff received more than £1 million also risked stoking anger over bank bonuses.
+2
HSBC caution: A 2013 profit increase of 9 per
cent on a year earlier was well below City expectations and the lender
also warned there could be greater volatility in emerging markets this
year
The firm racked up pre-tax profits of
£13.6billion for 2013, an increase of 9 per cent on a year earlier but
well below City expectations, leading its shares to fall on the news.
The row over bankers' bonuses was reignited as HSBC unveiled details of new share
windfalls for senior staff which will count as part of their fixed pay.
These
lucrative quarterly payments will be made to 111 senior staff worldwide
– 49 of them in the UK - whose huge annual bonuses fall would foul of new regulations from Brussels.The EU wants to restrict banks to paying bonuses no more than one year’s annual salary, rising to twice salary if shareholders approve.
Banks have been formulating plans to dodge the cap, which they claim will cause them to lose staff to US and Asian rivals which do not have any pay restrictions.
The UK Treasury has also launched a legal challenge against the pay curbs.
Yesterday Gulliver, described the bonus cap as ‘unfortunate’ and confirmed it would be applying to shareholders for the higher limit of twice annual salary.
His own package jumped to just over £8million, confirming him as the highest paid bank boss in the UK, with bosses at Barclays and Royal Bank of Scotland both waiving their bonuses for last year.
Cathy Jamieson, Labour's shadow Treasury minister, said: 'We're once again seeing bumper pay-outs with bonuses up this year at Lloyds, Barclays and now HSBC.
'The government should be repeating Labour's successful bank bonus tax this year. This could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits.'
TUC general secretary Frances O’Grady said the results were 'yet another example of soar-away boardroom greed'.
She added: '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.'
HSBC said Mr Gulliver's base salary will remain at £1.25million for this year but that he will receive a fixed pay allowance of £1.7million, to be awarded in shares on a quarterly basis.
Mr Gulliver’s package will not be tied directly to performance and so would not count as a bonus under new European rules preventing bankers from being paid bonuses worth more than two times their salary.
+2
HSBC boss: The bank's chief executive Stuart
Gulliver saw his pay package jump to just over £8million for 2013, up
from £7.5million the year before
The controversial new rules from Brussels came into effect in January, meaning that 2013 was the last year in which big bonuses could be paid.
Mr Gulliver's previous pay scheme offered an annual bonus worth up to three times his salary, plus a longer-term share award that pays out as much as six times salary.
The lender also warned there could be greater volatility in emerging markets this year as they adjust to changing economic circumstances, helping send its shares over 4 per cent lower in mid-morning trade, down 30.5p at 623.7p.
HSBC makes an estimated 90 per cent of its money outside Britain and has benefited from its exposure to emerging markets in Asia.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: ‘Against a backdrop of concern for slowing growth in the Emerging Markets, cautious near term management outlook comments have impacted.
‘The results were at the lower end of expectations, with difficulties in Latin America taking their toll. Furthermore, 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.
On the upside, broad progress was made, with underlying pre-tax profit higher in three of its four global businesses. Costs continue to be cut and remain a firm focus, whilst expected long term trends, such as growing trade across the Emerging Markets, appears to support underlying management confidence.‘
The banking group, Europe’s biggest closed 20 non strategic businesses last
year as part of a drive to cut overheads and simply the business. It has also cut 41,000 staff over the last three
years, with its global headcount falling to 254,000.
But efforts to streamline the business were offset
last year by a spiralling bill for payment protection insurance and a big
increase in the bank revenue.
The bank set aside an extra £450million in the final three
months of the year to compensate customers mis-sold PPI, taking its total bill
for the scandal so far to £1.9billion.
Mr Gulliver took the helm in 2011 and has led an extensive overhaul of the business.The lender was among those that did not need a taxpayer-funded bailout in the banking crisis.
‘For now, and having entered the credit crisis in better shape than most rivals, the bank remains a core sector investment. A progressive dividend policy continues to be pursued, whilst the bank’s avoidance of government ownership leaves it free of a major distraction compared to some rivals. In all, and despite the worry of Emerging Market exposure, analyst opinion continues to denote a buy,’ Keith Bowman said.
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