HSBC profits slide, yet boss was paid £7.6m last year

23 February 2015 -

Bank accused of rewarding failure as multi-million pound remuneration of under-performing CEO Stuart Gulliver is revealed

Jermaine Haughton

Top bankers’ salaries are once again in the spotlight, as it emerged today that HSBC chief executive Stuart Gulliver received £7.6m in pay and bonuses last year – despite the bank’s profits sinking by 17% to £12.2bn.

Tax domiciled in Hong Kong, the banking boss received just £400,000 less than in 2013, when the company rallied for a 9% profits rise to £13.6bn. HSBC has further confirmed that 330 of its top staff were each paid at least £738,000 last year. The latest revelations will do little to remove the prevalent perception of City bosses as greedy and overpaid – particularly as HSBC is under fire for its alleged part in helping millionaires avoid paying domestic taxes.

TUC general secretary Frances O’Grady, for example, said: “It is hard to see why HSBC is paying bonuses at a time when their role in tax evasion and avoidance has become so controversial.”

Just one year ago, HSBC said that Gulliver would get a £1.7m annual allowance on top his £1.2m salary and other bonuses. That allowance served as a mechanism for banks to avoid the EU’s bonus cap, which limits bonuses to one times salary, or twice if shareholders approve. Gulliver has also been drawn into HSBC’s current tax scandal, after leaked documents from its Swiss banking arm showed he had an account there until 2003 – and millions of pounds was held in a Swiss account through a Panamanian company.

According to reports, Gulliver’s lawyers have confirmed that he used the Swiss account to hold his bonus payments prior to 2003, when he moved from Hong Kong to London – and that the accounts had been voluntary declared to the UK tax authorities for years. Gulliver’s legal team also said that Hong Kong tax had been paid on this income and that he “followed this procedure because he wanted his taxed bonus earnings to remain private from his then colleagues in Hong Kong, which they would not have done if he had kept them in an HSBC Hong Kong account”.

On the back of the revelations, HSBC has issued another apology for the “unacceptable” tax avoidance activities at the Swiss branch – restating that the business has now been overhauled and holds higher standards.

HSBC chairman Douglas Flint – who will give evidence to the Treasury Select Committee on Wednesday – said: “The recent disclosures around unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do, and how far society’s expectations have changed in terms of banks’ responsibilities. They are also a reminder of the need for constant vigilance over the effectiveness of our controls and the imperative to embed a robust and ethical compliance culture”

He added: “We deeply regret and apologise for the conduct and compliance failures highlighted, which were in contravention of our own policies as well as expectations of us.”

Regulators, tax authorities and law-enforcement agencies around the world are preparing probes of HSBC’s Swiss operations, with investigations taking shape in France, Argentina, and India.

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Image of HSBC logo courtesy of ChameleonsEye / Shutterstock.