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200 HSBC staff paid more than £1m in 2012 200 HSBC staff paid more than £1m in 2012
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HSBC paid 204 of its staff more than £1m in 2012, a year when Britain's biggest bank made profits of $20.6bn (£13.7bn) despite being fined £1.2bn by the US authorities for helping Mexican drug barons launder money through the financial system.HSBC paid 204 of its staff more than £1m in 2012, a year when Britain's biggest bank made profits of $20.6bn (£13.7bn) despite being fined £1.2bn by the US authorities for helping Mexican drug barons launder money through the financial system.
At the start of a week in which Barclays and Royal Bank of Scotland are both expected to disclose the pay of their highest earners for the first time, HSBC disclosed that 78 of those who took home more than £1m were based in the UK. At the start of a week in which Barclays and Royal Bank of Scotland are both expected to disclose the pay of their highest earners for the first time, HSBC disclosed that 78 of those who took home more than £1m were based in the loss-making UK operations.
Unite described the scale of the pay for top bankers as an "outrage" given that some of its members take home £14,000 a year and are facing changes to their pension schemes and holiday. Unite described the scale of the pay as an "outrage" given that some of its members at HSBC take home £14,000 a year and are facing changes to their pension schemes and holiday.
The bank paid $200m of corporation tax in the UK on the profits, which were lower than the City expected, causing a near 3% fall in the share price by 10.30am to 708p. The bank paid $200m of corporation tax in the UK on the profits, which were lower than the City expected, causing the shares to fall xxx to xxxp.
To comply with UK rules which require banks to reveal the pay of the eight highest paid staff reporting to the chief executive, HSBC produced numbers showing they were handed between £7m and £2.3m, totalling just over £28m. Hong Kong rules require the bank to reveal the pay of their highest paid staff regardless of whom they report to and this produced different numbers - the highest paid received up to £7.5m and the lowest up to £3.9m and £27.8m in total. The bank's pre-tax profits for 2012 were $20.6bn, down 6% on 2011 and included $5.2bn caused by accounting rules requiring the bank to take account of the cost of buying back its own debt. HSBC is lobbying for these rules to be changed after they caused a $9bn swing on the previous year and it stressed its profits on an underlying basis were up 18% at $16.4bn.
The bank's pre-tax profits for 2012 were $20.6bn, down 6% on 2011 and included $5.2bn caused by accounting rules requiring the bank to take account of the cost of buying back its own debt. HSBC, which reported $1bn of losses in the UK after $2.3bn charges for misselling payment protection insurance and interest swaps, part of the US fine and the bank levy, makes a number of disclosures on pay. Banks are not required to disclose how many of their staff take home over £1m but HSBC has provided the number in recent years with out publishing the information in its annual report.
Banks are not required to disclose how many of their staff take home over £1m but HSBC has done so voluntarily in recent years. When Barclays and RBS release annual reports in the coming days, they are expected for the first time to formally lay out details of their highest paid staff, with Barclays likely to reveal as many as 600 took home more than £1m. To comply with UK rules HSBC said its eight highest paid staff reporting to the chief executive were handed between £7m and £2.3m, totalling just over £28m. Under Hong Kong, its five highest paid staff, received up to £7.5m and the lowest up to £3.9m and £27.8m in total.
Bonuses worth just $700,000 were clawed back from staff, according to a separate disclosure required to comply with international regulations which also showed that HSBC paid its 314 "code staff" – takers and spotters of risk – a total of $384.3m, an average of $1.2m. Bonuses worth just $700,000 were clawed back from staff, according to a separate disclosure required to comply with international regulations which also showed that HSBC paid its 314 "code staff" – takers and spotters of risk – a total of $384.3m, an average of $1.2m.All employees are subject to a "values" test before being handed any payout, which the bank described as a "gating item".
HSBC's chief executive Stuart Gulliver was awarded a near £2m annual bonus for his "strong leadership" and "personal behaviour" in tackling the revelations which caused the US authorities to fine the bank for helping drug traffickers launder money. HSBC's chief executive Stuart Gulliver was awarded a near £2m annual bonus for his "strong leadership" and "personal behaviour" in tackling the revelations which caused the US authorities to fine the bank for helping drug traffickers launder money. The bank produced a number of methods for disclosing his pay, including one total of £8.9m – which included his £1.2m a salary, benefits of £1.2m as well as £5.6m of bonuses released to him from previous years and £780,000 of the £2m bonus he was awarded for 2012 which he received during the year. If the full bonus is included - some of it is deferred for five years - his take home pay rises to £10m and does not include £3m of shares awarded to him which he could receive if certain performance conditions are reached.
The bank produced a number of methods for disclosing his pay, including one total of £8.9m – which included his £1.2m a salary, a bonus of just under £2m, benefits of £1.2m as well as £5.6m of bonuses released to him from previous years. Gulliver, who has been leading an effort to improve returns for shareholders and urged staff to demonstrate "courageous integrity", has closed or disposed of 26 businesses in 2012 and axed 27,700 jobs in the process, leaving the workforce at 270,000. In total 47 business have been axed since he was promoted from running the investment bank at the start of 2011.
He has been leading an effort to improve returns for shareholders and urged staff to demonstrate "courageous integrity". He has closed or disposed of 26 businesses and non-core investments in 2012 taking the total to 47 since beginning of 2011 when he was promoted from running the investment bank. The bonus pool took account of the US fine although in the investment bank was still up slightly on 2011 at $1.3bn – although was down across the group at $3.9bn, down from $4.2bn in 2011.
The bank's bonus pool was cut to take account of the US fine although the bonus pool in the investment bank was still up slightly on 2011 at $1.3bn – although was down across the bank. In total HSBC used $8.3bn to pay dividends to shareholders and took the unusual step of revealing that its policy for its first three interim dividends for 2013 which will be $0.10 per share, up 11%.
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". The US fine had been "extremely damaging to HSBC's reputation" Flint said, saying the bank had already "apologised unreservedly" for the incident in its US and Mexican operations which "exercised greatly" the board of the bank. Chairman Douglas Flint, who took home £3.7m last year, said banking has received a "huge wake-up call". The US fine had been "extremely damaging to HSBC's reputation" Flint said, saying the bank had already "apologised unreservedly" for the incident in its US and Mexican operations.
He also noted that UK government had increased the rate of levy applied on the global balance sheets of UK-based banks which cost HBSC $571m, some of which $295m related to non-UK banking activity. He said this took $0.03 off the bank's dividend, which stood at $0.45 per share for 2012. The UK's government bank levy cost HBSC $571m, just under of half of which was on its balance sheet outside the UK which Flint said knocked $0.03 off the bank's dividend, which stood at $0.45 per share for 2012. Another measure of return – which measures the difference between the return on capital deployed by shareholders and the cost of that capital – showed that the bank made an "economic loss" of $5.1bn. The directors were penalised for failing to meet their targets for return on equity of up to 15% by reporting 8.4% but received bonuses based on the capital strength as the crucial core tier one ratio was 12.3% above the 10% target.
This bank levy and $2.3bn for customer redress – including PPI and swaps mis-selling - drove the UK arm of HSBC to a $1bn loss.
In total HSBC used $8.5bn to pay dividends to shareholders, while its total bonus pool was $3.9bn, down from $4.2bn in 2011. The bank took the unusual step of revealing that its policy for its first three interim dividends for 2013 which will be $0.10 per share, up 11%.
Another measure of return – which measures the difference between the return on capital deployed by shareholders and the cost of that capital – showed that the bank made an "economic loss" of $5.1bn.