Britain's biggest bank HSBC has revealed how its top bankers will continue to enjoy soaring pay packets despite the European Union cap on bonuses.
HSBC chief executive Stuart Gulliver is to get £1.7 million in "fixed pay allowance" on top of his £1.2 million salary in order to keep his pay high in the wake of the EU banker bonus cap, which restricts bonuses to the same level as pay or twice that with shareholder approval.
This move sees Gulliver left with a £8 million total pay, up from £6.3 million the previous year. Details of Gulliver's allowance were revealed in HSBC's annual report, which showed that the bank's profits rose 9% to £13.6 billion in 2013. Despite HSBC's rise in profits, the bank's share price fell 4% as it was expected to post pre-tax profits of £14..8 billion.
The HSBC chief's allowance, which other big banks are expected to copy in order to dodge the EU bank bonus cap, is not tied directly to performance so would not count as a bonus under the European rules.
The EU bank bonus cap came into effect from January, with 2013 marking the last year that big bonuses could be paid as banks are expected to increase base pay or introduce allowances to get around the rules. According to its report, HSBC handed out over £1 million in bonuses to 239 of its top bankers in 2013.
Gulliver previously had a pay scheme that offered an annual bonus of up to three times his salary, along with a longer-term share award that pays out as much as six times salary.
Speaking last August, HSBC chairman Douglas Flint warned that the bonus cap "could have a highly damaging impact on our competitive position in many of our key markets, including those outside Europe”.