British Bank Bosses Rush to Pledge Pay to Coronavirus Charities

09 Apr 2020, 05:02 AM IST

(Bloomberg) --

Britain’s top bank bosses rushed to pledge big chunks of their pay to coronavirus charities, stung by criticism that they hadn’t made the same sacrifices as investors or front-line staff.

In a flurry of announcements Wednesday afternoon, chief executive officers of four of the nation’s five big banks announced they were giving up either a portion of their salary, some of their bonus, or both. Barclays Plc had made its announcement a day earlier, saying Jes Staley agreed to donate up a third of his fixed pay.

On March 31, the Bank of England had written to all of the big banks, demanding they scrap their dividends to conserve cash during the crisis. They complied with that request immediately, but had been quiet on the BOE’s other desire -- that they not pay cash bonuses to top executives as the pandemic roils the world’s economies.

“Any communications head or remuneration committee chair that is not advising their CEO to consider their pay is derelict in their duty,” said Matt Young, a former head of communications at Lloyds and now a partner at Apella Advisors. “There is a closing window in which bankers can do the right thing, and the last thing any bank should want is to be seen to be dragging its heels.”

CEOs Ditching Dividends Should Consider Their Pay, Investors Say

Banks have been a focus of government efforts to sustain the economy, and pressured to keep lending while receiving massive government support, including relief on some capital buffers.

Standard Chartered Plc CEO Bill Winters, Royal Bank of Scotland Group Plc CEO Alison Rose, Lloyds Banking Group Plc chief Antonio Horta-Osorio and HSBC Holdings Plc boss Noel Quinn all announced they were sacrificing some of their compensation on on Wednesday.

StanChart’s Winters and his finance chief, Andy Halford, both volunteered to take no cash bonus this year. On April 2, Winters had said the central bank hadn’t been clear enough in its guidance for bonuses, and StanChart would “first and foremost” consider business performance and then conditions for “all of our stakeholders.”

Who’s Giving Up What at Britain’s Banks

StanChart’s Winters is also making a donation of 825,000 pounds ($1.02 million), or half his fixed pay, to the bank’s $50 million global pandemic relief fund, according to a person familiar with the matter. The lender’s chairman, along with other board members and managers, are making donations to the fund.
Lloyds CEO Horta-Osorio and CFO William Chalmers will forgo their bonuses for 2020. Horta-Osorio’s variable pay in 2019 was 1.8 million pounds ($2.2 million); his total compensation fell 28% to 4.7 million pounds last year.
RBS’s Rose, whose employer is still majority owned by the British taxpayer more than a decade after the financial crisis, volunteered to give up her bonus. She and Chairman Howard Davies will also forgo 25% of their fixed pay this year. Rose’s fixed pay was set to be 2.2 million pounds, while Davies was due to earn 750,000 pounds. The salaries they are giving up will be donated to the National Emergencies Trust coronavirus appeal.
Barclays said Tuesday that Staley, Chairman Nigel Higgins, and finance director Tushar Morzaria would give a third of their fixed pay for the next six months to charities aiding those affected by the crisis.
At HSBC, Quinn and CFO Ewen Stevenson won’t take cash bonuses this year. Chairman Mark Tucker will donate all of the 1.5 million pounds he was due to receive to charity. All three will donate to charities supporting health care workers and vulnerable people in the U.K. and Hong Kong. Reuters reported the news earlier.
Nationwide Building Society boss Joe Garner said last weekend that he would give up a fifth of his salary and waive his bonus for running the U.K.’s largest mutual lender.
TSB managers gave up their bonuses for 2020 following the lead of executives at their Spanish parent Banco Sabadell SA.

Elsewhere in Europe, executives at Spain’s Banco Bilbao Vizcaya Argentaria SA were early to waive their bonuses, doing so on March 30. Italy’s UniCredit SpA soon followed suit.

“One of the longer-run consequences of the Covid episode may be a further reassessment of executive pay. And more broadly, how society’s cake gets sliced,” said Eric Moore, a portfolio manager at Miton Group in London.