HSBC shrinks bonuses for London investment bankers by up to 20%

Investment bankers in HSBC’s London operations have seen bonuses decline by as much as 20%, as the UK lender has kept a tight grip on pay amid a broader cost-cutting programme.

Bonuses in HSBC’s global banking operation in the UK have declined by between 10-20%, according to conversations with investment bankers in London. However, they added that there have been big swings between individuals, with high performers seeing increases and some people flat on 2019.

HSBC is skewing its bonus pool towards its Asian operation, which have brought in the majority of business in a year when the UK lender’s profits slumped by 34% to $8.8bn. The bonus pool across the bank is down by 20.4% to $2.7bn, with the bank saying pay “differentiated by market, with a better year-on-year outcome in Asia, reflecting the region’s strategic importance and consistent contribution towards Group performance”.

Managers at HSBC are expected to communicate bonuses to staff between 23-26 February, with many in London who have been told their number saying there was some disappointment. The bonus pool for global banking and markets, which houses its investment banking and sales and trading units, was down by 15% year on year, compared to 22.5% in other parts of the bank.

Investment bankers at Wall Street firms told FN in July that there had been huge swings in bonus payments this year, as banks have looked to reward high-performers without hiking the overall pool.

READ Bankers fume at brutal bonus round: ‘We haven’t seen this for years’

HSBC’s global banking business, which houses its investment bank, posted revenues of $3.8bn for 2020, which was broadly flat on last year. Within fixed income, revenues surged by 32% to $6.3bn, in line with sharp increases at most of its rivals.

Within its investment bank, HSBC paid average bonuses to top staff known as material risk takers of around $497,000 for 2020, an 11% decline on the 11% on the $559,000 average paid to the group the previous year.

HSBC is in the midst of an overhaul that will see 35,000 jobs lost, $100bn in risk weighted asset stripped out and costs cut to $31bn by 2022. Bank executives said on 23 February that 11,000 roles were cut in 2020, with full-time employees shrinking by 6% in Europe over the course of the year.

Despite the broader cuts across HSBC, it has been hiring senior investment bankers, part of its strategy to ensure it gets on more large equity and M&A transactions. Since June, it has brought in  Adam Bagshaw as global co-head of advisory and investment banking coverage from Deutsche Bank, former Credit Suisse dealmaker Vikas Seth as a vice-chair within its global banking unit, Jan Laubjerg as global head of natural resources and Steven Wirth as global head of real asset fund coverage.

An HSBC spokesman declined to comment on bonus payments.

To contact the author of this story with feedback or news, email Paul Clarke