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HSBC could increase bonuses by $300m this year

After cutting bonuses for its individual material risk takers by an average of 17% for 2022, there are signs that HSBC is planning to make amends. Announcing its third quarter results today, the bank said it's considering increasing its performance related pay (bonuses) in the fourth quarter and that this could lead to a 1% increase in its full year costs. 

Given that HSBC's costs were nearly $30bn last year, this presumably means that the bank is preparing to increase its bonus pool by $300m for 2023. This follows a reported $190m increase in performance related pay at HSBC already during the first half of the year. 

Last year's HSBC bonus pool was $3.36bn, so the implication is that this year's bonus pool will be up nearly 9%. 

Who'll get the extra rewards? HSBC is still talking about the strategic importance of its "wealth strategy", especially in Asia. However, in the global banking and markets business (the investment bank), some teams have performed abnormally well. Global debt markets (bond) trading revenues at the bank were up 40% in the first nine months of the year versus the first nine months of 2022. This compared to declines at most other banks and far exceeded the increase of 18% at Bank of America, the other strong performer in the area, which has been busy adding staff. 

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Similarly, combined capital markets and M&A advisory revenues at HSBC were up 34% in the first nine months, despite declines elsewhere. 

Only HSBC's equities salespeople and traders seem to have performed abysmally:  their revenues are down 54%, a fall that far exceeded Barclays' 18% decline.

There has been speculation that HSBC might close its equities trading business. However, there was no mention of that today.

HSBC said it's spent $200m on severance costs so far this year. 

HSBC's probable bonus generosity comes as other banks (eg. Goldman Sachs and Morgan Stanley) have indicated that they'll try to be generous in the coming bonus round. Last year, 473 people at HSBC earned more than €1m and 14 people earned more than €5m.

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AUTHORSarah Butcher Global Editor

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