{"id":205119,"date":"2020-04-05T08:28:47","date_gmt":"2020-04-05T08:28:47","guid":{"rendered":"http:\/\/www.thetruthseeker.co.uk\/?p=205119"},"modified":"2020-04-07T07:23:47","modified_gmt":"2020-04-07T07:23:47","slug":"banks-paid-millions-in-bonuses-weeks-before-ban-on-cash-rewards","status":"publish","type":"post","link":"https:\/\/www.thetruthseeker.co.uk\/?p=205119","title":{"rendered":"Banks paid millions in bonuses weeks before ban on cash rewards"},"content":{"rendered":"

Richard Partington \u2013 The Guardian April 1, 2020<\/strong><\/h1>\n

\"\"<\/a><\/p>\n

Millions of pounds of bank bonuses were paid out weeks before the Bank of England<\/strong><\/span><\/a> banned British lenders from offering cash rewards to their most senior executives as the coronavirus crisis escalates.<\/span><\/p>\n

In an intervention that sent banking shares tumbling on Wednesday amid renewed turbulence in financial markets, Threadneedle Street ordered Britain\u2019s biggest high street banks late on Tuesday to cancel almost \u00a38bn of dividend payments<\/strong><\/span><\/a> due to be made to investors this year, and told firms to scrap cash bonuses for top staff, or \u201cmaterial risk takers\u201d.<\/span><\/p>\n

However, banking industry sources said the bulk of cash bonuses will have already landed in executives\u2019 accounts, including as recently as last week at some of the biggest banks.<\/span><\/p>\n

According to a Guardian analysis of the bonus plans for employee performance at five of the UK\u2019s biggest banks in 2019, which are payable this year, more than half a billion pounds of cash payouts had been earmarked for top executives.<\/span><\/p>\n

Insiders said bonuses are usually paid alongside bankers\u2019 March pay cheques, including at the British firms with the biggest investment banking bonus pots \u2013 Barclays, HSBC and Standard Chartered<\/strong><\/span><\/a>.<\/span><\/p>\n

RBS and Lloyds, as banks bailed out in the 2008 financial crisis, and with smaller investment banking units, limit annual cash bonuses to \u00a32,000 per senior employee.<\/span><\/p>\n

Barclays<\/strong><\/span><\/a> had allocated \u00a3320m for its senior managers and material risk takers \u2013 staff who perform the most highly regulated jobs in finance \u2013 to be paid in cash rewards, with about half that amount deferred until next year. Sources said the bank, like others, paid bonuses in March.<\/span><\/p>\n

HSBC<\/strong><\/span><\/a> had set aside $300m (\u00a3242m) and Standard Chartered $147m, with both banks deferring about half of those amounts to pay to staff in future. They are also understood to have paid bonus payments in the past four weeks.<\/span><\/p>\n

Britain\u2019s biggest banks have almost 5,000 material risk takers between them, with more than 1,000 of these senior bankers paid more than \u00a31m each year. Bankers receive a large portion of their bonuses in shares, which are not affected by the Threadneedle Street move.<\/span><\/p>\n

The intervention by the Bank\u2019s Prudential Regulation Authority (PRA), which is responsible for finance industry stability, is the latest step to cushion the economic blow from the coronavirus crisis, which aims to help high street banks keep lending.<\/span><\/p>\n

Stopping cash bonus payments before they were made could only have happened if Covid-19 had struck earlier, it is understood, with officials racing to respond to the fallout.<\/span><\/p>\n

However, industry sources said they believed regulators were putting the banks on notice that bonus payouts for 2020 would need to be significantly scaled back from previous years\u2019 levels given the extent of the Covid-19 crisis.<\/span><\/p>\n

In a warning to bank chiefs, the head of the PRA , Sam Woods, said the regulator was \u201cconfident that bank boards are already considering and will take any appropriate further actions with regard to the accrual, payment and vesting of variable remuneration over coming months\u201d.<\/span><\/p>\n

Threadneedle Street\u2019s ultimatum for banks to scrap almost \u00a38bn of dividends sent shock waves through the industry on Wednesday, triggering a sharp sell-off in bank shares and causing anger among executives.<\/span><\/p>\n

According to the Financial Times, a debate among senior management at HSBC over whether the bank should relocate its headquarters to Hong Kong<\/a><\/strong><\/span> has been reignited after it was forced to cancel its dividend for the first time in 74 years.<\/span><\/p>\n

However, a spokesperson for HSBC said: \u201cThere are no discussions to review HSBC\u2019s global headquarters and no plans to reopen the issue.\u201d<\/span><\/p>\n

Bank shares were among the biggest fallers on the FTSE 100 on Wednesday amid investor concern over the scrapping of dividends. Lloyds and Barclays slumped by almost 12%, while HSBC fell by almost 10%.<\/span><\/p>\n

The index of leading UK company shares closed down more than 200 points, or 3.8%. The slide comes after share prices had steadied in recent days, after the worst quarter for losses<\/a><\/strong><\/span> on the FTSE 100 since the aftermath of Black Monday in 1987.<\/span><\/p>\n

Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Banks paid out millions in bonuses weeks before Covid-19 sent the stock market tumbling. Then the Bank of England banned them. Did they know what was coming? <\/p>\n","protected":false},"author":39262,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[66],"tags":[],"class_list":["post-205119","post","type-post","status-publish","format-standard","hentry","category-Economics"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/205119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/users\/39262"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=205119"}],"version-history":[{"count":2,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/205119\/revisions"}],"predecessor-version":[{"id":205122,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/205119\/revisions\/205122"}],"wp:attachment":[{"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=205119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=205119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thetruthseeker.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=205119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}