HSBC is set to become the latest major international bank to remove the European Union-imposed bonus cap that had applied to its UK-based workers.
The London headquartered lender’s shareholders voted in favour of scrapping the limit at its Annual General Meeting, the company said.
The move was recommended by the board after the UK government ditched the cap following Brexit.
HSBC, which announced this week the imminent retirement of its chief executive on the back of better than expected profits, had argued that removing the cap would reduce its fixed costs.
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The bank also said that higher share-based awards for its biggest earners would be easier to cancel or clawed back in any potential misconduct cases.
The cap had been introduced by the European Commission in 2014 to try to deter bankers from the kind of excessive risk-taking that was blamed for the global financial crisis of 2008.
The curbs, which limited bonuses to twice basic pay, have proved controversial with banks blaming them for creating a brain drain in Europe – forcing up salaries in the process to retain talent.
Influential critics of the cap have included Andrew Bailey, the Bank of England governor.
He said in 2014, before he took the top job in Threadneedle Street, that it was “the wrong policy” and the debate around it “misguided”.
HSBC’s vote took place less than 24 hours after Sky News revealed that US investment bank Goldman Sachs had become the first major operator in London to ditch the EU-imposed cap.
A spokesman said of the government’s decision to overturn it: “This approach gives us greater flexibility to manage fixed costs through the cycle and pay for performance.
“It brings the UK closer to the practice in other global financial centers, to support the UK as an attractive venue for
talent.”
Sky News has contacted HSBC for comment.
(c) Sky News 2024: HSBC is latest major bank set to remove bonus cap for UK staff
