HSBC's Stephen Green: We should be ashamed about 'distorted' bank bonuses

HSBC's chairman Stephen Green today attacked bankers' inflated bonuses and said they would have to accept lower pay-outs.

He said bankers "had a very good reason to feel uncomfortable" with a bonus system that was out of control.

"In banks' remuneration there has been plenty of distortion. As this newer environment beds down, I think you will see a market working in a way that we don't need to be ashamed about."

HSBC's rival Barclays is expected to announce that most of its senior executives will not get their bonuses for at least three years, and the 100 London partners of Goldman Sachs have had their 2009 bonuses capped at £1 million.

"You've had bonuses paid off gross income, you've had bonuses paid off first day profits, you've had bonuses paid without any capital charge and so you can see how that gives rise to the wrong and frankly inflated numbers," said Mr Green.

Barclays chief executive John Varley has written to employees confirming his plans to defer bonuses for senior staff.

"For some of our people there will be higher levels of deferral and a higher proportion of that deferral will be in shares," he wrote.

"We take our commitments in this area very seriously (including the obligations we have to our shareholders); we understand the public mood; we must behave responsibly, and we will."

In the letter, Mr Varley also says US President Barack Obama's proposals to tighten banking regulations have added to uncertainty in the market.

"These proposals are a long way away from becoming law, and there is very little detail in the announcement to help the market, or us, predict what impact they might have in practice."