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Banking... UK banks performance pay before guidelines

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HSBC

HSBC

HSBC

UK banks may change the way they reward staff for performance this year without waiting for regulators to issue updated guidelines on pay.

The European Banking Authority (EBA) planned to publish new guidelines on bankers' pay by the end of last year, incorporating the findings of a probe into discretionary remuneration.

The rules will be delayed until at least next month, a source said.

The London-based EBA moved late last year to close a loophole in European Union law that banks used to sidestep a ban on bonuses worth more than twice fixed pay with so-called role-based allowances.

"My suspicion is that banks will take a look at the things highlighted by the EBA and start looking at whether these parts are in their own allowances and adjust them accordingly," Mark Ife, a remuneration partner at Herbert Smith Freehills, said.

"This is something that ought to be treated as a matter of urgency."

EU politicians last year adopted the world's toughest bonus rules to tackle what they called a gambling culture blamed for triggering the 2008 financial crisis.

Royal Bank of Scotland and HSBC were among European banks that responded by giving employees cash allowances depending on seniority to evade the restriction. HSBC was the first lender in the UK to reveal its plans for allowances.

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