Coronavirus: Banks’ top brass forgo bonuses

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Barclays buildingImage source, Getty Images

Senior executives and board members at major UK banks have agreed to give up their 2020 bonuses as the coronavirus crisis continues.

This part of their remuneration, which is worth millions of pounds, will in many cases be donated to charity.

The move, from banks such as HSBC, RBS and Lloyds, came after calls from the Bank of England to restrict bonuses.

Natwest boss Alison Rose said she took the decision as many people were worried about their own jobs.

Major UK banks have been under pressure from the Bank of England in light of the coronavirus pandemic.

At the end of March, the central bank, which has been working closely with HM Treasury, wrote letters to the big banks asking them to scrap dividend payments and restrict bonuses.

The Bank of England wants banks to be in as strong a position as possible to lend to businesses and help the UK economy as many sectors grind to a halt.

'Unprecedented time'

Many banks say that rules brought in after the 2008 financial crisis have left them in a position to help keep the economy afloat at the moment.

However, sources at some of the banks said that taking action on bonuses is appropriate at a time when many customers and businesses are facing hardship.

Natwest chief executive Alison Rose said on Wednesday: "I am fully aware of the challenges being faced by so many people across the country and my priority is to make sure we do everything in our power to support our customers through this incredibly difficult and unprecedented time.

"In the current environment, many of our customers are worried about their jobs and their businesses and, in recognition of this, I have taken these decisions on my own pay."

Ms Rose stands to give up about £2.3m in total.

She will donate a quarter of what is left of her 2020 fixed pay to the National Emergencies Trust's Coronavirus Appeal, which comes to £419,000. She also told the board she did not want to be considered for a share award worth up to £1.9m.

Domino effect

The major UK banks, which had already individually been considering making announcements about executive remuneration, made a flurry of statements starting on Tuesday.

Barclays was one of the first to make the move, with a domino effect among the other banks.

Barclays chairman Nigel Higgins, group chief executive Jes Staley and group finance director Tushar Morzaria each said that they would donate a third of their fixed pay for the next six months to charities supporting vulnerable people hit by Covid-19. In total, that is worth about £800,000.

HSBC chief executive Noel Quinn said in a note sent to employees that he would donate a quarter of his base salary for the next six months to charity, which works out at £160,000. He will not take his annual cash bonus, which would have been up to £1.2m.

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Chief financial officer Ewen Stevenson said that he would do the same, donating £93,000 and forgoing £706,000.

HSBC chairman Mark Tucker will donate his entire 2020 fee to charity, about £1.5m.

At Standard Chartered, chief executive Bill Winters will forgo his cash bonus, which in 2019 was worth £1.3m. Chief financial officer Andy Halford will also give up his bonus, worth £777,000 last year.

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At Lloyds Banking Group, executive directors and group executive committee members will waive their bonuses.

Chief executive Antonio Horta-Osorio will waive a bonus up to 140% of his base salary, which is up to £1.8m.

He said: "We are doing all we can to support our customers, colleagues and communities. We understand the difficulties and challenges that they are facing in these unprecedented times, and are working at pace to provide the support they need."

TSB said on Tuesday that its chief executive, Debbie Crosbie, and the executive committee would give up their bonus awards for 2020.

Ms Crosbie earns about £950,000 a year and her bonus can be up to 80% of that on top.