HSBC boss gives bonus to charity

2010-03-01 12:32

London - HSBC, Europe's biggest bank, on Monday posted a modest rise in 2009 net profits and said that chief executive Michael Geoghegan would donate his bonus to charity over the next four years.

The group added that it was "well positioned" for economic recovery, adding that emerging markets would out-perform those of the developed world, growing three times faster this year.

Net earnings rose nearly two percent to $5.834bn last year, despite rising bad debts, HSBC revealed in a results statement.

Loan impairments and other credit provisions jumped 6.2% to $26.488bn, while revenue fell 11.2% to $78.631bn.

"Throughout the crisis, HSBC has remained profitable, financially strong and independently owned by our shareholders," said HSBC chairperson Stephen Green in the earnings release.

"While emerging markets are leading global recovery and seem certain to drive the majority of the world's growth in the generation ahead, recovery in developed markets has been slow to start."

HSBC, which received no state bailouts like other rivals, said Geoghegan would donate up to £4m of his bonus to charity until 2013 amid public outcry over bank pay.

The group's 2009 performance meanwhile undershot market expectations for net profit of about $6.4bn.

And pre-tax earnings tumbled 23.9% to $7.079bn. But the group said it had remained in the black throughout the global financial crisis.

Other banks waiving bonuses

In early morning trade, HSBC shares sank 2.96% to 698.20 pence on the London stock market.

"That HSBC has reported a pre-tax profit in all three years since the onset of the crisis should be a source of great confidence to our shareholders, our depositors and all of our customers," added Green.

"Our track record of delivering results through adversity, and at all stages of the economic cycle, remains intact."

Geoghegan, who relocated from HSBC's London headquarters to Hong Kong earlier this year, revealed his bonus news in a separate statement.

"This year the performance of HSBC is significantly stronger and shareholders have seen rises in the equity value of their stock as well as continuing to receive quarterly dividends," Geoghegan said in the statement.

"I have therefore accepted an award of deferred stock, releasable over the next three years and subject to certain conditions.

"Provided that the stock is released I can confirm that between now and 2013 I will give up to £4m to charities around the world, including important causes in Hong Kong and in the UK, where I was a resident for six years until January this year."

The banking sector is wrestling with the dilemma of rewarding top executives amid public outcry over lavish pay and excessive risk-taking in the industry, seen as a major cause of the global financial crisis.

Geoghegan and other British-based executive directors at HSBC, the biggest bank in Europe, took no bonuses for 2008 following dismal results due to losses racked up at its subprime lending business in the United States.

Other top banks in Britain - Barclays, Royal Bank of Scotland and Lloyds Banking Group - declared recently that they would waive 2009 bonuses for their top executives.

Barclays and HSBC have weathered the global downturn relatively successfully, avoiding state control, but RBS and LBG are now partly nationalised after a series of enormous government bailouts.