SINGAPORE — Standard Chartered (StanChart) is holding “accountability reviews” for around 150 current and former employees around the world, and it may “claw back” part, or all, of the bonuses paid in previous years if these employees are deemed to be at fault for loans that have turned bad.

One human resources expert said “claw backs” clauses are actually fairly common in bank employment contracts and added that transparency is key to addressing concerns over such clauses.

“The genesis of these clawback clauses goes back to right after the previous financial crisis that happened in the year 2008 and 2009, when banks started to realise that a lot of the actual impact of the risks that they take on behalf of customers shows up much later,” said Mr Dhritiman Chakrabarti, managing director of rewards, talent and communication for Asia Pacific at Willis Towers Watson.

“If senior executives are very clear that a certain percentage of their compensation would be tied to a three-year goal, then that is something that doesn’t create a disconnect. In fact, it creates an incentive for them to be thinking about medium-term performance and not just short-term performance.”

Responding to queries from Channel NewsAsia on Wednesday (Feb 24), StanChart said the accountability reviews are still ongoing. It added that employees at all levels fall within the scope of these reviews and that penalties could include the reduction or cancellation of prior year incentive awards, as well as a reduction of current year incentives.

StanChart on Tuesday posted its first annual loss since 1989, with its pre-tax profit at US$800 million — down from US$5.2 billion in 2014. CHANNEL NEWSASIA