HSBC bonuses seem to be even lower and more deferred than bonuses at RBS
When it comes to being a 'backmarker' in terms of bonuses, RBS is supposed to be it; nowhere else is supposed to pay less. Unfortunately, HSBC has broken the rules.
HSBC's results show compensation expenses in HSBC's investment bank (Global Banking & Markets) rose 8% year on year during 2010, to $4.7bn. At the same time, profits in the investment bank fell by around 10%.
HSBC doesn't divulge precisely how many people it employs in Global Banking and Markets (GB&M), but insiders say it's around 22,000. This suggests the average GB&M employee will receive 132k for 2010.
At BarCap, the comparable figure was 229k; at RBS it was 144k.
Compared to their counterparts at British banks, HSBC's investment bankers are therefore not very well paid.
It gets worse. When the $324m HSBC spent on UK and French payroll taxes last year is deducted, the average GB&M employee will receive just 124k in his/her pocket.
The deferrals
HSBC also appears to be regimentally applying the European Union's deferral rules.
The bank has divulged the pay and deferral schedules for its give highest paid senior executives who are members of the Group Management Board, but not Directors of HSBC Holdings plc.
Information provided for those top five employees show HSBC deferring 60% of their bonuses over three years, paying them 20% in cash upfront and paying 20% in already vested shares which are only accessible after six months.
It's not clear whether similar deferrals will be applied across the bank, but the Sunday Times predicted similar deferrals yesterday, suggesting this might be the case.
At RBS, the vesting schedule is understood to have become more favourable this year, with up to 85% of bonuses allegedly accessible in cash by June for non-code staff. And at BarCap, MDs are allegedly receiving 40% in cash upfront.
Redundancies?
Could there be redundancies in HSBC GB&M as well?
Stuart Gulliver said, ominously, that costs above the bank are above the target range and therefore, "completely unacceptable."
In Global Banking andMmarkets, the cost ratio was 49.9% in 2010, up from 39.1% in 2009 (but down from 67.3% in 2008).
Within GB&M, rates revenues fell in 2010, as did revenues from balance sheet management, and revenues in Europe generally. In 2009, 56% of HSBC's total revenues came from Europe. Last year, that percentage was 22%.
Unless revenues in Europe pick up, staff slimming seems a possibility. HSBC investment bankers may have to tolerate moderate pay and uncertainty about their future.
