HSBC Holdings is set to buck an industrywide trend of higher banker bonuses as it gears up for a multibillion-US dollar cost reduction from an ongoing restructuring.
Some employees in areas such as the corporate and institutional banking arm have been warned to expect lower payouts this year, according to people familiar with the situation. While no final decision has been reached on the incentives, the internal guidance so far is that the bonus award is likely to disappoint in coming weeks, they said, asking not to be identified discussing private information.
A spokeswoman for HSBC said the board remuneration committee will make variable decisions in the first quarter “based on our full-year performance.”
“We are committed to ensuring our employees are rewarded fairly and to attracting and retaining talent in each of the markets we operate,” the spokeswoman said.
The deliberations over the awards come months after HSBC said its pay pool would be “broadly in line” with the US$3.8 billion in bonuses it paid out in 2023.
Since taking the helm in September, chief executive officer Georges Elhedery has kicked off a sweeping revamp of Europe’s largest bank, arguing a new structure would provide the company with a “clear competitive advantage and the greatest opportunity to grow.” He’s already announced the merger of commercial and investment banking outside of Hong Kong, axing layers of senior management.
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Any decision to shrink the bonus pot would disappoint HSBC staffers, who have been closely watching the restructuring against a backdrop of generally rising industry payouts by European peers.
Barclays and Deutsche Bank are expected to raise staff awards for 2024 on the back of stronger performances from their investment banking arms.
HSBC told managers that the revamp would take until June 2025 to pull off, and while the total cost saving is still a work in progress, executives hope the work will help them shave off at least US$3 billion in expenses, Bloomberg News has reported earlier. That would represent a roughly 10 per cent cut in the bank’s expense bill, which is estimated to be around US$32.6 billion for the year, according to figures compiled by Bloomberg.
The bank is expected to provide details of the financial impact of its restructuring plans, including a one-time charge tied to that work, alongside its full-year results next month.
Bloomberg Intelligence analysts said last month that HSBC’s cost-cutting could be “dialled up” to provide a greater boost to profits. In particular, the analysts expect to see more cuts to the bank’s US$19 billion annual wage bill, which makes up the bulk of its expenses.
Top executives who have exited so far include Annabel Spring, global head of private banking, Celine Herweijer, group sustainability officer, Stephen Moss, head of the Middle East, North Africa and Turkiye, and Colin Bell, who ran the bank in Europe. Another departure was Nuno Matos, who ran wealth and personal banking and was Elhedery’s main rival for the CEO role. BLOOMBERG
