HSBC jacks up salaries to beat crackdown on bonuses
17 Nov 2010
HSBC, Eeurope's largest bank, is to double the basic pay of its top investment bankers to compensate a cut in bonuses.
The move is likely to attract fierce criticism as opposition to large cash awards from the government, regulators and the public is growing amid public spending cuts.
Last month, the 27-member Committee of European Banking Supervisors has recommended a formal limitation to the size of bankers' bonuses (See: EU regulators mull cap on bankers' bonuses).
The firm said it was struggling to hire new staff because of a Financial Services Authority rule that stops it offering two-year guaranteed bonuses.
The bank's incoming chief executive Stuart Gulliver said earlier this month that he was concerned that Europe and Britain were going further than rivals elsewhere in clamping down on pay.
He said it had become hard to hire staff in fast-growing countries such as China, Brazil and India, where HSBC is struggling to compete with local or US rivals for talent.
Chuka Ummunna, a Labour MP on the Treasury select committee, said the HSBC plan raises further questions; at a time when banks are able to double the basic pay of investment bankers, why the government is seeming to water down the banking levy.
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