HSBC Plc chairman Sir John Bond yesterday admitted it was unfortunate that multi-million dollar bonuses for senior executives had been linked to job cuts following the merger of his bank with the Bank of Bermuda.

And he revealed that 150 job cuts planned at the bank over the next 12 months had already been decided by the bank prior to its agreement with HSBC.

Sir John was speaking to the media yesterday as part of a round of meetings he held this week with bank executives, Government and business leaders to put “a human face” on the $1.3 billion merger of Bermuda's largest bank with multinational banking giant HSBC.

The proposed sale, announced last October, has drawn heavy criticism on a number of fronts - not least for HSBC's agreement to collectively pay the bank's top five executives $6.59 million in cash, and a further $4.7 million in HSBC restricted shares if they cut 150 jobs or effected savings of $12 million in salary costs while retaining 70 percent of those staff specified by both the bank and HSBC as “key”.

Sir John, on the Island from Saturday through last night, defended the cash and investment bonuses that senior executives stand to make in the deal.

But he said he recognised the linking of the bonuses with job losses could have soured people's perception of the deal, including bank employees who are directly affected by the targets.

However, he said there were two separate issues to be considered.

He praised the bank's executive for its work in building up the Bank of Bermuda, and said HSBC wanted to ensure management stayed on.

“The Bank of Bermuda is a fine institution that is highly respected around the world. From HSBC's perspective, we would want to keep management in place.”

He said it was prudent that they make sure steps were in place to keep key personnel on board.

“We would look very silly if management walked out the door,” he added.

It has already been announced that chief financial officer Ed Gomez will be replaced by an HSBC appointee after the sale, and chief executive officer Henry Smith will step down within a year of the sale to be replaced by chief operating officer Philip Butterfield.

All other senior executives and the board will reportedly remain.

Sir John said “employment levels” were one thing, and that HSBC was not “accelerating” that beyond what the bank had already set as its target.

He said the bank had already set the number of jobs it wanted to trim from the operation prior to its negotiations with HSBC, and that number was kept as a target as a “by the way, deliver on what you were going to do”.

He said he accepted that the link between the bonus payments for senior executives, on the back of job cuts might not sit well with the public.

Although saying efficiency levels were par for the course in business, he understood that there were people behind the 150 job cuts and that lives would be affected.

Bank officials added that it was hoped that most of the staff reduction would be accomplished through natural attrition rather than through redundancies.

The second issue, he said, was the importance of retaining key staff, citing the “quality of management” as essential, and that the bonus was “a mechanism to ensure key people stay with us”.

“It is a measure we have accorded to the management team. We want to keep the top talent,” he said, adding: “We thought we had better make it a deliverable.”

Mr. Smith added that other targets, such as specific revenue and new business growth, had originally been looked at but it was decided that it would be difficult to pinpoint who was responsible for what growth, as the bank's global business would be merging into HSBC's worldwide network.

Those who stand to be paid the bonus are Mr. Butterfield, head of private client services Wayne Chapman, head of banking services Michael Collins and head of the bank's fund administration arm, Global Fund Services, Paul Smith. Henry Smith is also eligible for the bonus, but his share is not tied to the targets.