HSBC boss Stuart Gulliver 'could see salary doubled' as bank gets set to report £15billion profit
HSBC boss Stuart Gulliver is reportedly in line for a big wage bump that allows the bank to get round new European rules preventing bankers getting bonuses more than two times their salary.
As the bank prepares to announce record profits of nearly £15billion for the past year, City analysts are suggesting that Gulliver's salary could be doubled to compensate for the restrictions.
He may also be offered a new top-up payment in the form of a shares allowance. It would not be tied directly to performance and so would not count as a bonus under the rules.
Mortgage lending: Analysts believe HSBC has focused on clients with big deposits
According to the Sunday Times, HSBC's annual report on Monday will show Mr Gulliver was paid about £7.5million for last year, including bonuses and benefits worth about five times his basic salary.
The new rules from Brussels came into effect in January, meaning that 2013 was the last year in which such big bonuses could be paid.
Tomorrow's full-year results for HSBC are expected to show pre-tax profits jumped by a fifth to $24.7billion (£14.8billion) - beating the $24.2billion it made before the credit crunch.
The banking group makes an estimated 90 per cent of its money outside Britain and has benefited from its exposure to emerging markets in Asia.
Gulliver took the helm in 2011 and has led an extensive overhaul of the business. He is paid a basic salary of £1.2million.
His current pay scheme offers Gulliver an annual bonus worth up to three times his salary, plus a longer-term share award that pays out as much as six times salary.
Chancellor George Osborne has filed a formal complaint against Brussels over the plans amid fears its introduction will drive up fixed salaries and increase the risk to financial stability.
It is thought that HSBC has been discussing the option of making quarterly share payments to its 1,000 top staff to get around the cap.
Meanwhile, HSBC is expected to say UK home loans helped to fuel last year's surge in profits. The bank now has a 12 per cent share of new mortgage lending, according to analysts at asset manager Investec, having lent £100billion to British homeowners. In 2007 it had just a 2.5 per cent share. The City believes the bank has focused on customers with big deposits.
HSBC boss: Stuart Gulliver could be in line for a big salary increase
In August it said it had approved £7.1billion of new mortgages to 68,000 customers for the first six months of the year, and Investec’s Ian Gordon expected the figure to have risen in the second half of 2013. He said: ‘Demand for mortgages has increased strongly and other banks have been shrinking their mortgage businesses.’
According to the Council of Mortgage Lenders, HSBC was the UK’s sixth largest mortgage lender in 2012 in terms of outstanding loans. Lloyds Banking Group had a 25 per cent share of the market with £325billion of outstanding loans.
HSBC is also set to reveal the effect of turmoil in emerging markets. Lending in Asia, one of its core businesses, is likely to be weaker amid signs that China’s growth may be slowing.
HSBC’s record profit will come as Royal Bank of Scotland reveals a loss of up to £8billion on Thursday. RBS said last month it is paying out £3.1billion for mis-selling PPI, interest rate hedging products and US mortgage bonds. A sale of assets in its ‘bad bank’ will mean a further £4.5billion loss.
Chief executive Ross McEwan wrote to staff on Friday to assure them he would not announce huge job losses this week, but is expected to reveal big cuts when he unveils his strategy with the results.
RBS is not likely to announce how it plans to tackle the Brussels rules on bonuses until it presents its annual report later in the spring.
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