Staff protests have forced HSBC to abandon a pay freeze imposed on staff less than two weeks ago, even though its chief executive has warned of the “very challenging operating environment” this year.

In an email to the bank’s 250,000 staff, Stuart Gulliver revealed that complaints about the way the pay freeze had been announced had forced him into the U-turn.

He said the bank would use cash set aside to pay bonuses to allow the pay rises to take place. “These pay rises will be funded from the 2016 variable bonus pool (for bonuses to be paid in 2017), the total quantum of which will be determined by our 2016 performance,” Gulliver said. “To be clear the 2015 variable bonus payments to be paid in 2016 will not be affected by this action.”



HSBC’s shares were down 4% in early trading on Thursday, hitting their lowest levels since April 2009 as the rout in banking shares – which has focused on rivals such as Deutsche Bank – continued.

Gulliver said HSBC, which will be first major UK bank to report its 2015 results on 22 February, “must be cautious and realistic about the outlook for our revenues in 2016”.

He told staff: “Since we do not control the global economy, interest rates or oil prices we must focus on what we can control, which is primarily our costs and the proactive management of our credit quality and related charges.

He added: “Several of our competitors have recently announced large-scale redundancies, salary freezes, bonus reductions and further cost reduction programmes in addition to those already in place and, hence it is clear we are not alone in facing these challenges.”

The about-turn was announced as the bank prepares to confirm whether it intends to move its headquarters out of the UK.

Bloomberg reported this week that the bank’s board is due to meet on Sunday and there is mounting speculation that the directors will vote to stay in the UK, where it has been based since 1992 after leaving Hong Kong.

Gulliver said the low oil price, low interest rate environment and the uncertain economic backdrop as creating a challenging backdrop for the bank. “All of these factors are affecting stock markets with investors signalling their views on the banking sector in particular, which is the worst-performing sector thus far in 2016,” he added.

In June, Gulliver outlined plans to axe 25,000 jobs around the world – including up to 8,000 in the UK – as part of his plan to achieve global cost-savings of $5bn (£3.3bn). A recruitment freeze remains in place.

Dominic Hook, the national officer for finance at the Unite union, said: “This is a deeply embarrassing U-turn for the bank, but a victory for staff across HSBC globally.

“The bank’s attempt to freeze pay was grossly unfair, shamefully handled and Unite is glad that the resulting outrage has forced Stuart Gulliver to see sense. This episode shows the importance of having a recognised trade union which can make sure senior management hear the voice of staff loud and clear.”