Pay bonanza at HSBC

An extraordinary pay bonanza among senior staff at Britain's biggest bank HSBC was revealed today as it posted record profits of £7.7billion.

One unnamed executive alone was paid a staggering £12.6 million, HSBC revealed in City filings, while another made £10.5 million. The £12.6million executive was not even on the board.

The largesse did, however, also reach the boardroom, where executive chairman Sir John Bond was paid £4.25 million.

The value of his pension was topped up from £5.5 million to £7.9 million, making it one of the biggest retirement nesteggs ever seen in a British boardroom.

Chief executive Stephen Green, who is a part-time Anglican preacher in London-and author of Serving God, Serving Mammon? made a total of £2.67 million.

The bank announced plans for pay increases of 57 per cent for its non-executive directors, who include former Cabinet Secretary Lord Butler and former British Airways chief Lord Marshall.

They will now receive base pay of £55,000 plus an extra £15,000 for each board sub-committee they sit on. While the identity of the £12.6 million earner has not been disclosed, one of the highest paid earners at HSBC is thought to be American investment banker John Studzinski, 48.

He was parachuted into the bank from Morgan Stanley last March and is co-head of HSBC's investment arm alongside Stuart Gulliver, also thought to be one of the bank's highest earners.

Sir John Bond said the high earners came from the investment banking arm of HSBC, not the personal banking side.

The payments were performancerelated and designed to reward people who brought business into the bank.

Today's profit figures from HSBC - the biggest ever by a British bank - will have delighted shareholders but enraged customers.

The bank revealed that it racked up profits before tax at the rate of £244 a second in 2003. That is up 37 per cent on its 2002 profits, which were themselves a record.

Eddie Weatherill of the Independent Bank Advisory Service immediately condemned the bank: "This follows a very familiar pattern. It indicates to us that there is widespread profiteering at the customers' expense. The banks are making hay while the sun shines."

Barclays, Royal Bank of Scotland and Halifax Bank of Scotland have all announced record profits in the past few days and the entire banking industry is on target for total profits before tax of £26 billion.

Critics complain the banks make excess profits through the payments clearing cartel, through mis-selling and by misleading customers with opaque terms and conditions.

The official Cruickshank Review of four years ago found the main banks were guilty of making excess profits.

The Consumers' Association said: "It is astonishing that the banks can hike their profits while offering such a bad deal across their product ranges."

But Douglas Flint, finance director of HSBC, denied the bank was making excess profits. "We reckon we make about £70 per UK customer," he said.

He pointed to the success of First Direct, HSBC's widely acclaimed online bank, as an example of giving customers what they wanted.