大象传媒

HSBC: reform bankers' pay

• Robert Peston
• 13 Sep 08, 12:00 AM

Bankers' pay needs to be reformed so that they are no longer handsomely rewarded for deals that turn bad, says the chairman of the world's second biggest bank.

Stephen Green the chairman of HSBC, says in a 大象传媒 interview:

"I think it is important and will become much more the focus of attention to ensure that remuneration schemes operate in a way that is lined up with the long term interests of the owners of the business.

"There has been far too much focus on payments that are very short term focused, people who pick up the tab for short term profits, without having to bear the costs of long term impairments.

"At the end of the day I think it is right for the market to set compensation levels but it must do so in a way that is consistent with the long term interest of the market as a whole..and the shareholders' of a given institution in particular."

Green was interviewed by me for the 大象传媒 News series Leading Questions. The full interview will be broadcast tonight at 9.30pm and can also be watched by clicking .

In the interview, Green also discusses whether there has been a decline in ethical standards in banking, the lessons for banks of the credit crunch and how to win business in China

COMMENT

Few bankers have stood up and admitted that remuneration in their industry was one of the causes of the credit crunch.

And none have done so who are as influential as Stephen Green, chairman of the world's second largest bank, HSBC.

So it matters that Mr Green concedes that some bankers were paid too much for deals that may have yielded short term profits but ended up costing their institutions a fortune.

He says - what has been blindingly obvious to those outside his industry for some time - that bankers' pay must be reformed, so that bankers only receive fat rewards as and when their transactions yield sustainable long term profits.

We should probably all breathe a sigh of relief at this acknowledgement that banks' current woes, the erosion of their capital which makes it harder for them to lend to us, was self-inflicted - that the crunch was the consequence of deals done in haste by bankers whose judgement was impaired by greed.

But it's all very well to recognise the need for reform. It's quite another to actually get all banks and bankers to sign up for what many of them will see as a pay cut.

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