HSBC drops plan for 2016 pay freeze in speedy backpedal

Thu Feb 11, 2016 7:59am EST
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By Carolyn Cohn and Richa Naidu

LONDON (Reuters) - HSBC (HSBA.L: Quote), Europe's largest bank, has dropped plans to freeze pay this year, according to a memo by Chief Executive Stuart Gulliver seen by Reuters, reversing a cost-cutting decision made less than two weeks ago.

The memo, in which Gulliver expresses caution on the outlook for HSBC's revenues this year, comes at a significant time, days before HSBC's board is set to meet to discuss whether the bank will move its headquarters to Hong Kong or stay in London.

Pay rises will be funded from a bonus pool originally intended for payments to be made in 2017, the memo from Gulliver to all employees and dated Feb. 11 said.

A hiring freeze introduced in the fourth quarter of 2015 will remain in place.

The bank, which had more than 266,000 staff at the end of 2014, plans annual cost savings of up to $5 billion by 2017.

"As flagged in our Investor Update we have targeted significant cost reductions by the end of 2017," a spokeswoman for HSBC said in a statement.

Gulliver said that following feedback on the pay freeze and the way it was communicated, he had "decided to change the way these cost savings are to be achieved".

"We will therefore proceed with the pay rises as originally proposed by managers as part of the 2015 pay review, noting that, consistent with prior years, not all staff will receive a pay rise."   Continued...

HSBC Group CEO Stuart Gulliver speaks during a ceremony launching a commemorative 150th anniversary banknote in Hong Kong March 4, 2015.    REUTERS/Bobby Yip