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* HSBC chairman Flint says tough for banks to hire from tech
* HSBC says UK "ringfencing" to cost 1-2 bln stg toimplement (Adds comments, details)
By Steve Slater
LONDON, Oct 21 (Reuters) - European rules to cap bankers'bonuses at twice fixed pay are "a retrograde step" that couldadd to difficulty in recruiting staff to the industry, the headof Europe's biggest bank HSBC said on Tuesday.
Europe has said banks can only pay bonuses to staffequivalent to twice their fixed pay and last week said new'allowances' introduced by many to meet the rules counted asvariable pay, so would need to be restructured again. Banks saychanges already made would reduce risk-taking by staff, withbonuses to be paid in future years or potentially taken back.
"The proposals out of Europe in terms of capping the ratioof variable to fixed (pay) is a retrograde step againstlong-term deferral," Douglas Flint, HSBC chairman, told UKlawmakers on Tuesday.
"Hopefully we'll find a balance over the coming months andyears to readdress that, because it's terribly important that wehave a balanced framework that protects the system fromexcessive risk taking, which deferral and clawback does, but atthe same time isn't so uncertain that we find it difficult toattract people into the industry."
Europe's banking regulator has said it will issue morecomprehensive guidelines next year on remuneration practices.
Flint said it can be difficult to attract people into theindustry.
"When you say to someone in the tech industry that you'dlike them to join banks to help with cyber risk, and say yourmoney will be paid in seven years time ... it's an easyconversation - they decline to consider it," he said.
Flint was being quizzed on regulatory issues by the House ofLords EU Economic and Financial Affairs sub-committee. He saidUK rules to force banks to separate their domestic retailbanking operations, known as ringfencing, will be expensive toimplement at HSBC.
"Ringfencing will cost a billion or 2 billion (pounds) toimplement ... it is very significant," he said.
Flint said one of most troubling areas of Europeanregulation was the attempt to impose rules overseas.
"I was disappointed to see it regulate remunerationglobally, for banks headquartered in Europe, because it seems tome that what is done in the subsidiaries in Latin America andAsia should not necessarily be tied to European laws," he said.
HSBC, which operates in 74 countries, has previously saidthat puts it at a disadvantage when competing with U.S. andAsian rivals in overseas markets.
"Where they go extraterritorial and say you've got to complywith our rules as well as someone else's, you end up with achoice of who's law you break, and that is a very uncomfortableone," he told the lawmakers.
(1 US dollar = 0.6192 British pound) (Editing by Jason Neely; Editing by Elaine Hardcastle)
