Reflections on the greater likelihood of getting compensated handsomely at HSBC - UPDATED

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Inside HSBC in London

HSBC’s bonuses are big news. In a not unpredictable development, HSBC has decided to follow Commerzbank and Bank of America Merrill Lynch in issuing some new stock to help cover its cash bonus commitments.

Employees won’t notice much difference: in the event that their bonus is more than £50k, new stock will be issued to fund it. That stock will be sold immediately by HSBC and the proceeds passed seamlessly on to the employee.

Yesterday, we suggested, the outcome would probably be rather disappointing. The Telegraph reported that the new shares issued to pay the bonuses will be worth less than 0.1% of the bank’s “outstanding share capital.”

Last time HSBC reported, in September, shareholders’ equity across the group was worth $154bn. The implication was therefore that the new share-funded bonus pool will be worth no more than $154m (£98m). Today, however, the Telegraph clarifies the issue: HSBC's new shares will actually be worth £1.7bn. Shared among the 6,000 or so staff at Canary Wharf, this amounts to £283k each - and is considerably more generous.

Traditionally, HSBC has not been a massive payer. Last year, its code staff earned £1.05m each, versus £1.16m at RBS, £2.4m at JPMorgan, £3.1m at Citigroup and £4m at Goldman Sachs.

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