News Update

HSBC Cuts Base Pay By A Quarter For Newly Promoted Bankers Ahead Of UK Bonus Reform

HSBC Holdings Plc has reduced the base pay it offers to certain newly-promoted senior investment bankers in the UK by 25%. This decision comes ahead of an upcoming regulatory change enabling higher bonuses. According to insiders, the new salary offered to manage directors in some departments is approximately £225,000 ($273,380), significantly lower than the £300,000 currently paid to bankers in the same position.

 

It is important to note that variable pay for “material risk takers” in the UK is restricted to a maximum of two times their base salary. These rules were implemented almost a decade ago when the UK was part of the European Union. According to a Bank of England study, this cap has caused banks to reorganize their pay structures rather than decrease overall compensation for regional staff. The UK government is planning to change the bonus cap rules to boost the competitiveness of the financial sector post-Brexit. However, finance firms have responded warily, and a consultation is set to close on March 31.

 

HSBC has stated that it anticipates that the regulatory changes will prompt an increased emphasis on variable pay. In response to the proposals, the bank plans to evaluate the remuneration arrangements for its executive directors. It will seek feedback from its shareholders regarding any potential adjustments, as detailed in its annual report published in the previous month.