HSBC’s annual report is out today. It contains a long, long (long) remuneration report.
Buried therein, is information reflecting the disadvantage of working in a regulated position as a member of ‘code staff’ in an investment bank. HSBC has 170 code staff, each earning more than £630k; 64 of them are in theUK.
If you’re code staff, the European Union mandates that your bonus must be deferred. Hence, HSBC is deferring 60% of its stock bonuses over a period of three years.
However, if you’re not a member of code staff, it’s a different matter. In today’s report, HSBC also reveals that it’s paying seven senior people who are not directors of HSBC Holdings but who are all on its global management board, salaries in excess of £600k. Three of these people are getting substantial additional allocations of cash and are therefore earning £1m, entirely in the form of a cash payment.
In cash terms, this makes HSBC look generous. The bank also revealed today that its five highest paid staff earned £27.7m collectively for 2011 (cash and deferred), down 19% from £34.3m last year.
Away from the top ranks, however, HSBC has cut pay more assertively. The global bonus pool for its banking and markets staff is down 26% this year to £1.2bn; in the UK it’s down 28% to £400m.
HSBC doesn’t divulge how many people it employs in global banking and markets, but there are thought to be around 6,000 people working at CanaryWharf– implying an average London investment banking bonus of around £70k per head.
HSBC’s investment bankers in the UK appear to have suffered disproportionately as a result of rising staff costs inAsia. The bank is halfway through a cost cutting programme, but the Asian effect drove costs in the investment bank up, to 57% of the total in 2011 - from 49% in 2010.
What happened to those £1.7bn of additional shares HSBC issued last week purely to fund its UK bonus pool? A spokesman for the bank clarified matters: the £1.7bn isn’t all being paid at once, but is to cover, past, current and future compensation arrangements. HSBC is generous, but not that generous after all.
27% of the HSBC bonus pool is deferred, down from 31% last year. (HSBC)
The UK banking levy cost HSBC $570m, of which $340m had nothing to do with the UK. (HSBC)
What Stuart Gulliver had to do to earn his bonus. (Guardian)
Nearly a third of HSBC’s cost increase came from Asia, where it had to pay more to attract and retain staff. (Financial Times)
Two more years of pain coming at RBS. (BBC)
Prudential plays down reports that it might move to Asia. (Evening Standard)
The former head of equities trading at UBS has become the chief executive of Getco. (Financial Times)
Graduates prepared to work longer for less. (BadLuckGeneration)
What to do if you become unexpectedly rich. (WSJ)