HSBC’s lending to Scots tops £1bn as profits outshine rivals

HSBC, Europe’s biggest bank, has seen its lending in Scotland push through the £1 billion milestone as it turns the screw on its indigenous rivals.

The group, which yesterday booked bumper annual group profits of £13.8bn, said it had seen “accelerated growth” in its lending to smaller businesses.

Although it did not give a breakdown of the headline Scottish figure, the bank said lending balances among its SME customer base had risen by 38 per cent in 2011.

Britain’s big banks have come under fire for failing to meet SME lending targets under the UK government’s Project Merlin agreement.

Scottish finance secretary John Swinney last week called on the Treasury to do more to accelerate bank lending after it emerged that Scots SMEs had received just 4.8 per cent of lending under the project, although they account for 6.4 per cent of UK small businesses.

John Rendall, head of HSBC in Scotland, said: “We have seen accelerated growth in our lending at the SME end of the marketplace and also growth at the larger corporate end. A key driver has been our success in persuading businesses to shift to us, though it’s not all about new customers.”

He described the bank’s lending criteria as “very consistent” over the past five years.

Rendall said 2012 had begun “with a lot of momentum”, with the group investing some £9 million expanding its presence in Scotland.

High street banking outlets have been opened in Falkirk and Stirling, with Dundee and Dumfries set to follow. Each branch houses a “dedicated full-time small business specialist”, Rendall noted.

The update for Scotland came as the bank posted one of the biggest profits ever recorded by a British company following a strong performance in emerging markets and a resilient year in the UK.

The £13.8bn profit haul was 15 per cent up on 2010 and in line with City forecasts. It contrasts with big losses at part-taxpayer owned lenders Lloyds and Royal Bank of Scotland and profits of almost £6bn at Barclays.

However, HSBC was forced to defend bonuses for City high-fliers as it revealed its boss received an annual pay package worth a potential £7.2m.

In addition to his £1.3m salary, chief executive Stuart Gulliver is in line to pocket a £2.2m bonus and long-term incentives possibly worth up to £3.8m.

The annual report showed that 170 members of staff earned more than $1m (£630,000) last year while 205 key employees in the UK earned a total of $84.2m. It paid one of its bankers, whom it declined to name, £8m.

Scots-born chairman Douglas Flint, himself set to receive £3.4m, admitted that “a few people” were paid “extraordinarily well” but insisted it needed to attract and retain the best staff.

He argued that HSBC was the second biggest payer of dividends in the UK and said its success helped boost people’s long-term savings and pensions. HSBC’s total dividend for the year rose 14 per cent to 41 cents a share.

David Fleming, national officer at union Unite, said: “How can Stuart Gulliver have a clear conscience over his reward package of £7.2m, while thousands of staff face uncertainty about their jobs?”

The bank, which employs 50,000 people in the UK and 288,000 globally, last year announced plans to cut some 30,000 jobs over the next two years.