The EU’s “grotesque” bonus cap made senior British bankers lazy and less prone to hard work, the chief executive of Standard Chartered has said.
Bill Winters said the now-defunct bonus regime, introduced by the EU in 2014 in an attempt to limit risk-taking after the financial crisis, had created the “wrong incentive” for bank managers.
The pay arrangements capped bonuses at two times salary but were scrapped by the UK last year in a post-Brexit shake-up.
Mr Winters said: “Europe imposed a two-times fixed pay bonus cap several years ago, the effect of which was that everybody that was subject to that cap got a grotesque increase in fixed pay.
“I say grotesque because it was exactly the wrong incentive. It was a bad policy.
“It incentivised managers in my position to hang around clipping coupons and not do a very good job for their company.”
“Clipping coupons” is an American insult similar to “pen-pushing”, and refers to the act of clipping and cashing coupons attached to investment bonds. It is often used to describe someone as idle.
Banks including HSBC, Barclays, JP Morgan and Goldman Sachs have raised the cap on bonuses for their top bankers since the UK abolished the regime last year.
Standard Chartered, worth £30bn, is a FTSE 100 giant headquartered in London. Despite making all its money overseas in regions such as China and Africa, it was ensnared by the bonus cap because it is regulated by UK authorities.
Mr Winters will benefit from the bonus cap overhaul after Standard Chartered proposed a pay shake-up.
The 63-year-old will earn £1.5m in salary under the new plan – down from £2.5m currently – but he will earn more in bonuses and share payments.
Mr Winters stands to gain a maximum pay packet of £13.1m. His total pay package for 2024 rose 46pc to £10.7m.
He said on Friday: “I’ll have to explain to my mother why my salary has been cut by half. If we perform well I’ll earn more money. If we perform poorly, I’ll earn quite a bit less. That’s exactly as it should be.”
His comments came as the bank reported an 18pc rise in full-year pre-tax profits to $6bn (£4.7bn) last year compared with the prior 12 months. Operating income, a measure of turnover, rose 8pc to $19.7bn.
The turnover was a record for the lender and reflected a jump in earnings from its wealth management business, which increased income 29pc to $2.4bn. The bank also announced a $1.5bn buyback to reward shareholders.
Executive pay has been a lightning rod for criticism at Standard Chartered.
Mr Winters blasted shareholders as “immature” six years ago after a significant investor pay rebellion.
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