HSBC head calls for bank pay reform

15 September 2008

Banking executives' pay is excessive and should be trimmed back, the chairman of HSBC has said.

Stephen Green also said in an interview that the financial sector focussed too much on short-term profits, rather than on the health of the sector as a whole.

His comments were made before this weekend's collapse of Lehman Brothers, and news of Merrill Lynch's merger with Bank of America.

Both US banks had traded heavily in complex mortgage-backed financial products, which subsequently lost value with the onset of the credit crunch.

Global financial firms have lost around $400 billion in asset write-downs and credit losses relating to the crisis.

However the International Monetary Fund has predicted that the total financial hit could approach $1 trillion.

Former head of the Federal Reserve, Alan Greenspan, also said last weekend that he expected more banks to fail due to the crunch.

Speaking to the BBC, Mr Green commented: "There has been far too much focus on payments that are very short-term focused, people who pick up the tab for short-term profits, without having to bear the costs of long-term impairments."

HSBC, listed in London, is Europe's largest bank.

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