Late last month, HSBC Holdings CEO Stuart Gulliver announced a global freeze on hiring and compensation in a move designed to help the bank cut some $5 billion in costs by the end of next year.
To be sure, HSBC isn’t alone in seeking to roll back costs amid bouts of global market turmoil. As Bloomberg notes, “UBS froze investment bank salaries this week and Barclays Plc extended a freeze on hiring new staff indefinitely in December, while Credit Suisse Group AG and Deutsche Bank AG are cutting thousands of jobs.”
“It would be inappropriate vis-à-vis society to post €5.2bn in legal provisions in one year and not reflect that in compensation, particularly when the share price has fallen, and shareholders have suffered,” Deutsche’s John Cryan said, on the heels of what analysts described as “horrible,” “grim” annual and quarterly results. “By and large, I think we are underpaying against our international peer group this year and I hope that many staff understand why.”
In short, this isn’t the best time to work at a systemically important bank if job security is your thing.
The likes of Credit Suisse, Deutsche Bank, and SocGen have reported horrendous results over the last several weeks and there’s every reason to believe things are about to get a whole lot worse, which is why the “DB is fixed” enthusiasm (triggered by a supposed plan by the bank to repurchase its debt) was immediately faded.
But while cutting compensation may indeed be the right move for many of the world’s largest and most nefarious financial institutions, it turns out employees aren’t really big on getting paid less – even if it’s “appropriate vis-à-vis society,” to quote Cryan.
That’s why after a veritable insurrection, HSBC has decided to cancel the global pay freeze.
“HSBC staff have been complaining to managers since the pay freeze was announced, which would have cancelled increases already recommended as part of the bank’s 2015 pay review,” Bloomberg reports, citing unnamed sources.
“We have listened to feedback and as a result decided to change the way these cost savings are to be achieved,” Gulliver said in a memo sent to staff on Thursday, which was confirmed by an HSBC spokeswoman. “We will proceed with the pay rises as originally proposed by managers as part of the 2015 pay review, noting that, consistent with prior years, not all staff will receive a pay rise.” And why shouldn’t they “proceed with the pay rises?” Things are going so well:
One wonders why Gulliver even bothered with the pay freeze in the first place.
After all, it’s a bit difficult to imagine what the counterfactual would have been here: did someone actually think employees were going to be happy about getting less money?
Meanwhile, the families of multiple US citizens murdered by Mexican drug cartels are suing the bank for providing drug lords with “material support.” “Without the ability to place, layer and integrate their illicit proceeds into the global financial network, the cartels’ ability to corrupt law enforcement and public officials, and acquire personnel, weapons and ammunition, vehicles, planes, communication devices, raw materials for drug production and all other instrumentalities essential to their operations would be substantially impeded,” a complaint filed in a federal court in Texas reads.
In short, plaintiffs say the bank’s employees are largely responsible for financing a multi-billion dollar global “terrorist” drug organzation. That, we suppose, is why Gulliver pays them the big bucks.
via Zero Hedge http://ift.tt/1XmF1DQ Tyler Durden