HSBC juniors would welcome this giant bonus increase

Following last year's bonus misery, it seems that HSBC might be about to make amends. 

Bloomberg is reporting today that HSBC plans to double bonuses for "some" junior bankers this year, and to increase pay for its senior bankers by 10%.

HSBC juniors we spoke to said this is the first they've heard of the prospective increases, but that they would be very welcome following last year's comparative stinginess.

"We were definitely underpaid last year, and there's been very heavy staff turnover as a result," says one London associate. Another says third year analysts received bonuses that mostly maxed out at 60% of salaries during the last bonus round (Goldman paid more than 100%). 

It doesn't help that HSBC increased junior bankers' salaries last summer, but is still paying less than most rivals. In London, junior banker salaries at HSBC are now thought to be £55k for first year analysts, £60k for second years, £65k for third year analysts, £90k for first year associates, £100k for second year associates and £115k for third year associates (these numbers are unconfirmed by the bank). By comparison, many U.S. banks are now paying £70k to analysts in their first year.

HSBC announces its bonuses in two weeks' time. "We do expect a better year because last year was massively down," says another associate, adding that he thinks the Bloomberg story was "carefully leaked by the bank," to try and keep people happy.  

HSBC's potential generosity comes after the bank hired Adam Bagshaw from Deutsche Bank as global co-head of advisory and investment banking coverage in August 2020. Bagshaw has set about hiring people like Nomura's Chris Fincken as an MD in London M&A, and headhunters say he plans to make more recruits in 2022. Last year, HSBC cut compensation for its material risk-takers (typically MDs) from an average of $1.3m to $1.1m each.

Even if their bonuses double, HSBC's junior bankers aren't expecting to be paid on a par with people at the highest paying firms. "We're never going to be in-line with the boutiques or the bulge brackets," says one. "You might argue that HSBC's peers for compensation purposes are the French banks and other tier three payers," says another associate.  

One insider says HSBC particularly needs to hike compensation for juniors in Singapore, where competition for talent is especially intense. In London, insiders say junior bankers have left for banks like ING and BNP Paribas.

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