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| Archbishop of Canterbury accuses banks of hypocrisy over bonuses | Archbishop of Canterbury accuses banks of hypocrisy over bonuses |
| (8 days later) | |
| The new archbishop of Canterbury has accused banks of hypocrisy in continuing to pay their staff big bonuses while insisting they are undergoing a cultural overhaul. | The new archbishop of Canterbury has accused banks of hypocrisy in continuing to pay their staff big bonuses while insisting they are undergoing a cultural overhaul. |
| Justin Welby – a former oil company finance executive – was speaking in his role as a member of the parliamentary banking commission looking at professional standards in the wake of the Libor and PPI misselling scandals. | Justin Welby – a former oil company finance executive – was speaking in his role as a member of the parliamentary banking commission looking at professional standards in the wake of the Libor and PPI misselling scandals. |
| Two months ago HSBC was also fined a record £1.2bn over allegations of money laundering for Mexican drug barons. Regulators said HSBC had allowed at least $881m of drugs money through its accounts. | Two months ago HSBC was also fined a record £1.2bn over allegations of money laundering for Mexican drug barons. Regulators said HSBC had allowed at least $881m of drugs money through its accounts. |
| Taking evidence from HSBC's two top bosses – its chief executive, Stuart Gulliver, and chairman, Douglas Flint – the archbishop said: "I'm increasingly baffled at the discussion we are having. What is it essentially about bankers that means they need skin in the game [bonuses]? We don't give skin in the game to civil servants, to surgeons, to teachers. | Taking evidence from HSBC's two top bosses – its chief executive, Stuart Gulliver, and chairman, Douglas Flint – the archbishop said: "I'm increasingly baffled at the discussion we are having. What is it essentially about bankers that means they need skin in the game [bonuses]? We don't give skin in the game to civil servants, to surgeons, to teachers. |
| "There's a whole range of people who don't have that. It seems to me that you are putting huge effort into a values-based organisation and yet at the end of the day, particularly for your most senior staff who are most important as regards setting values and culture, you seem to be saying the only way you can motivate them to any significant extent is with cash." | "There's a whole range of people who don't have that. It seems to me that you are putting huge effort into a values-based organisation and yet at the end of the day, particularly for your most senior staff who are most important as regards setting values and culture, you seem to be saying the only way you can motivate them to any significant extent is with cash." |
| The bankers, who said they wanted to turn HSBC into a bank of "courageous integrity", insisted it was necessary to pay bonuses because they provided incentives that could be clawed back if mistakes were later uncovered. | The bankers, who said they wanted to turn HSBC into a bank of "courageous integrity", insisted it was necessary to pay bonuses because they provided incentives that could be clawed back if mistakes were later uncovered. |
| Flint said: "The complexity is greater [than 20 years ago] and the pay structures are to partly reward people for being successful but also to protect the firm and shareholders from mis-rewarding people for things that they thought were terrific at the time but turned out to be wrong in the future." | Flint said: "The complexity is greater [than 20 years ago] and the pay structures are to partly reward people for being successful but also to protect the firm and shareholders from mis-rewarding people for things that they thought were terrific at the time but turned out to be wrong in the future." |
| He added that bonuses being far larger than basic pay was likely to be the norm in other private sector businesses. | He added that bonuses being far larger than basic pay was likely to be the norm in other private sector businesses. |
| Gulliver can earn a bonus up to three times his base salary and long-term incentives in cash and shares worth more than six times the basic pay, the commission heard. | Gulliver can earn a bonus up to three times his base salary and long-term incentives in cash and shares worth more than six times the basic pay, the commission heard. |
| The archbishop said bankers should either get a smaller base salary compared to equivalent professionals, followed by a large payment after a long period, or big salaries with no top-ups later on. | The archbishop said bankers should either get a smaller base salary compared to equivalent professionals, followed by a large payment after a long period, or big salaries with no top-ups later on. |
| "You seem to be wanting the high pay and the bounce at the end. I don't understand the relationship between that and a value-based, culture-based organisation … How do you deal with an internal contradiction which we don't hear in so many other sectors of our society?" | "You seem to be wanting the high pay and the bounce at the end. I don't understand the relationship between that and a value-based, culture-based organisation … How do you deal with an internal contradiction which we don't hear in so many other sectors of our society?" |
| The commission heard that the bonus culture had grown from the 1980s and that professionalism had been lost from the industry. | The commission heard that the bonus culture had grown from the 1980s and that professionalism had been lost from the industry. |
| Flint said: "I do think there is an aspect of professionalism which pervades medicine, law, accounting and so on, where you are taught ethics as part of your course and you are taught that you have a duty to your profession that transcends whoever your particular employer is at that time. I think banking used to have that." | Flint said: "I do think there is an aspect of professionalism which pervades medicine, law, accounting and so on, where you are taught ethics as part of your course and you are taught that you have a duty to your profession that transcends whoever your particular employer is at that time. I think banking used to have that." |
| He revealed that HSBC used to give all new recruits a copy of George Rae's 1885 book, The Country Banker – His Clients, Cares and Work. | He revealed that HSBC used to give all new recruits a copy of George Rae's 1885 book, The Country Banker – His Clients, Cares and Work. |
| "We're trying to create a professionalism where there is a broader duty which transcends the profitability of the firm, which I think is a really important task." | "We're trying to create a professionalism where there is a broader duty which transcends the profitability of the firm, which I think is a really important task." |
| During the two-hour session of the commission Gulliver admitted the bank had been "very attractive to transnational criminal organisations and terrorists". | During the two-hour session of the commission Gulliver admitted the bank had been "very attractive to transnational criminal organisations and terrorists". |
| Gulliver said: "The behavioural stuff and what went on in Mexico is clearly absolutely shocking to us. I've been with the firm 33 years and this gives me absolutely no pleasure whatsoever. | Gulliver said: "The behavioural stuff and what went on in Mexico is clearly absolutely shocking to us. I've been with the firm 33 years and this gives me absolutely no pleasure whatsoever. |
| "You shouldn't be under any illusion as to how seriously we take this and how upsetting the whole thing has been. We've crushed our reputation with the Mexican events." | "You shouldn't be under any illusion as to how seriously we take this and how upsetting the whole thing has been. We've crushed our reputation with the Mexican events." |
| As a result, the chief risk officer at HSBC is now the sixth highest-paid employee, compared with 2006 when at least 50 executives would have a bigger pay packet. | As a result, the chief risk officer at HSBC is now the sixth highest-paid employee, compared with 2006 when at least 50 executives would have a bigger pay packet. |
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