HSBC ready to cavern in on chiefs reward

Chief executives at HSBC and Standard Chartered are preparing to forgo big cash bonuses for last year, after a backlash from politicians and consumers.

Though the two firms have emerged from the financial crisis in better shape than most of their peers, sources say executives realise that they cant fly in the face of public sentiment.

They may however, accept deferred awards. The stirrings came as the government approved the Royal Bank of Scotlands plan to pay out more than 1.3billion in bonuses for 2009, despite it preparing to reveal a pre-tax loss of at least 5billion today.

HSBC boss Michael Geoghegan earns a basic salary of 1.07million a year, and is entitled to a maximum annual bonus of 4.3million.

HSBC chief executive Michael Geoghegan and his Standard Chartered counterpart Peter Sands both announce annual results next week.

Sources say they have accepted that they need to water down their bonuses and defer them until later years, or forgo them altogether.

A final decision on the exact format has not been made. Chief executives at Royal Bank of Scotland, Lloyds and Barclays have already waived their bonuses.

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City Minister Lord Myners piled the pressure on HSBC and Standard Chartered (up 19p to 1547.82p) by saying yesterday: ;I think the onus will now fall on [Michael Geoghegan, chief executive of] HSBC and Mr Peter Sands of Standard Chartered to see whether they conclude that they should waive any bonus entitlement which they might be granted.

HSBC (up 17.20p to 708p) has already shelved plans to give Geoghegan a bumper pay rise after pressure from investors.

Geoghegan earns a basic salary of 1.07million a year, and is entitled to a maximum annual bonus of 4.3million.

However, he is by no means the best paid banker at HSBC. Accounts for 2008 revealed that the top five earners between them took home 32.4million that year.

Sands enjoys 850,000 in basic pay, a maximum annual bonus of 2.125million.

Meanwhile RBS, which is 84pc owned by the taxpayer, was forced by the government to reduce its bonus pool to 1.32billion.

It had initially hoped to pay 1.6billion in bonuses, claiming that the market rate would have been 2.1billion. It will pay around 225million to the Treasury in bonus tax.

A senior RBS source said the ratio of compensation to revenue would be around 27pc to 28pc, at the lowest end of the industry scale. RBS will also say today that it has drastically undershot a government target of providing 16billion worth of extra lending to small businesses.