Top task for an HSBC boss on his uppers? Cuts

HSBC HQ London 2

For a former boxer, HSBC boss Stuart Gulliver does seem to have a lot of trouble hitting targets.

When he bounced into the ring back in 2011, he slipped out of his dressing gown and quickly promised to simplify the bank and slash its costs. Sadly, though he sacked about 50,000 staff, his shots either had no real sting or missed altogether, with costs rising and the shares losing 5% during his tenure. So Gulliver has retreated to his corner for a vigorous rubdown.

Anyway, this week provides Raging Gull (as he almost certainly wasn’t known during his fighting days at Oxford) another shot at the title.

He will leap off his stool on Tuesday to unveil his latest HSBC strategy: the market is expecting him to sack a load more bankers, give further detail on shedding international investment banks, talk about offloading the UK retail bank, and elaborate on how he’s going to decide whether the bank’s HQ is better off in the UK or elsewhere.

This all seems quite strange to those still concerned with whether HSBC has been fighting fair, but the City no longer seems to prioritise the bank’s conduct, the risks relating to the problems at Fifa, and the small matter of that pesky tax scandal.

In fact, investors seem focused solely on what Gulliver and his corner can conjure up – and if they possess a decent cut man.

Standard banker with actual standards

As Gulliver has a second stab at sorting out the problems besetting HSBC, there’s a new man at rival Standard Chartered.

Bill Winters will take over from Peter Sands as chief executive of the struggling emerging-markets bank this week, with the new arrival that rarest of breeds: a banker with a half decent reputation.

Winters is known as just about the only financier to say he was leaving a job to spend more time with his family, then actually do so, while he was one of the five-member panel that devised the ringfencing reforms for the British banking industry in 2011, separating UK banks’ retail operations from their investment banking activities and forcing them to hold more capital. As that move still seems to be upsetting lots of bankers, many think it must be a reasonable idea.

Still, there are lots of problems at Standard Chartered for the new man to sort, and which will end up shaping his reputation in the City. The market is bracing itself for a slash in the dividend, while there is also a lot of talk of a rights issue, meaning that some are cool on the shares. As one City wag puts it: Winters is here.

It pays to advertise. Just ask Sir Martin

Sir Martin Sorrell, the self-effacing boss of advertising giant WPP, was paid £43m last year, making him the highest-paid boss of a British public company. To put it another way, he trousered 37 times his base salary of £1.15m, 179 times more than his average employee, or about 1,000 times the per capita gross domestic product of Ireland, to which his company once decamped in order to pay lower taxes.

These statistics possibly have the potential to irritate some, so it’s fortunate that the rarely silent knight (and his almost totally silent board) will get a chance to justify it all this week at the group’s annual meeting – albeit one that threatens to be a repeat of last year’s gathering, when nearly 30% of investors refused to endorse the remuneration policy.

A spokesman for WPP smooths: “Over 90% of Sir Martin’s 2014 award was performance-based, the vast majority of which was from a five-year long-term award, and £19m of which was attributable to share price appreciation and dividends. WPP achieved a total shareholder return of 171% versus a FTSE 100 increase of 21% over the same period.”

Or, in other words, WPP is invoking the L’Oréal defence of the boss being worth it – an excellent advertising slogan, sadly dreamed up by a rival.

Powered by article was written by Simon Goodley, for The Observer on Saturday 6th June 2015 16.00 Europe/London © Guardian News and Media Limited 2010


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