UK's largest bank to publish packages for top eight, with CEO Stuart Gulliver expected to take home £12m in cash and shares
HSBC is expected to admit on Monday that bonuses handed out to top bankers before the bank's NHFA subsidiary was slapped with a £10.5m fine for misselling to elderly customers are being clawed back.
The UK's largest bank is also expected to throw down the gauntlet to other UK banks by becoming the first to reveal the multimillion-pound pay deals for its top eight executives, even though new rules from the Treasury have yet to be finalised.
As the UK's largest bank announces its profits for 2011, it will also publish the annual report containing remuneration details for the chief executive, Stuart Gulliver, who could – if he has achieved all his targets – take home more than £12m in cash and shares.
Part of his bonus may be affected by the fine by the Financial Services Authority, which caused the bank major embarrassment in the UK last year and a compensation bill of nearly £30m.
Bailed out Lloyds Banking Group recently clawed back more than £1.5m of bonuses because of a payment protection insurance scandal. HSBC was also affected by this misselling but it was on a much smaller scale and is unlikely to impact on bonuses in the same way. When the FSA fine was announced in December, the bank quickly apologised, saying it was profoundly sorry for the misselling to 2,500 elderly customers
There will also be a focus on the way that the bank complies with new proposals from the Treasury, which has just completed a consultation on how to disclose the pay details of the top eight executives even if they do not have a seat on the board. The top-eight disclosure follows on from last year's Project Merlin when HSBC and other UK banks had to publish the pay of the "five highest-paid senior executives" although they did not have to identify them.
HSBC is expected to stick to the same methodology as last year in calculating the pay deals of the top eight by using the shares that are awarded to executives to show how much risk is at stake. But the Treasury's consultation also considered whether the amount "vested" should be published, which shows how much is handed to the executive at the end of the performance period.
Other banks will be watching HSBC closely, particularly Barclays, which is expected to be next to release its pay deals, possibly in early March.
HSBC's top five received just over £12m last year but, under disclosure demanded by the authorities in Hong Kong, the bank said the five "highest-paid individuals globally" received a combined £34.3m in salaries, bonuses and pension contributions – highlighting how the pay disclosure can produce different results.
The chancellor, George Osborne, has yet to announce whether he expects awards of shares or vested amounts to be published for this year.
Separately, the Royal Bank of Scotland's chief executive, Stephen Hester, said a sale of RBS shares – even at a loss to the taxpayer – could lead to a rise in their price. The taxpayer is losing more than £20bn on its 82% stake although the former City minister Lord Myners has suggested there is merit in selling some shares at a loss to show to private investors that the government wants to reduce its stake.