Finance

HSBC’s top investment banker bonuses fall by 11% as job cuts take hold

HSBC cut bonuses to its top investment bankers by 11% last year, but nearly doubled redundancy payouts for executives in the unit as the UK lender reshaped its business with deep job cuts.

The bank paid out $611.6m to 541 senior investment bankers known as material risk takers, a top group of employees who influence the risk profile of the bank. The Bank of England has told UK lenders to show restrain on bonus payments for its senior staff this year as the Covid-19 crisis has hit the economy.

The average bonus payment for the bank’s MRTs within its investment bank was around $497,000, the bank revealed in its annual accounts, a reduction of 11% on the $559,000 average paid to the group last year. Overall compensation remained flat at an average payment of around £1.1m.

The number of people falling into this group of top investment bankers also fell by 7.5% as the bank unveiled plans to cut 35,000 jobs of part of a transformation programme that will see the bank shift its business towards Asia.

HSBC’s overall bonus pool dropped by 20.4% to $2.7bn, with the payments skewed towards Asia as performance in the region outstripped other parts of the world.

HSBC awarded $36.6m to 38 people within its investment bank in severance awards, up by 84% on the previous year. One banker leaving the firm received $7.3m, whereas the highest such payment in 2019 was $3.1m.

READ HSBC London bankers brace for job cuts amid Asia shift: ‘There is a lot of middle management in the UK’

UK lenders’ bonus payments are under increased scrutiny this year after regulators called for prudence, despite investment banking revenues surging. In March, the Bank of England told UK lenders to stop paying dividends and cash bonuses to their senior executives, including material risk takers. In a December update, the regulator said it expects banks to exercise a “high degree of caution and prudence” on variable compensation for 2020.

READ HSBC plans $6bn in Asia investments as profits slump by 34%

Barclays increased average bonuses for senior executives in the unit housing its investment bank by 14% to around £636,000, Financial News reported. NatWest Group paid £60m to a handful of top employees in its sales and trading division, even as it posted a full-year loss for 2020.

HSBC also paid 1,149 people over €1m during 2020, which was broadly in line with the previous year.

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

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