HSBC bonus worries: "They'll be allocated based on closeness to senior people"

US banks may have announced their bonuses already, but if you work for HSBC the moment of truth has not arrived. When it comes on February 25th, it could be harsh.

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Bloomberg reported last week that HSBC is both changing its basis for allocating bonuses and intending to pay some of its people no bonuses at all. From now on, variable compensation at the bank will be based on an eat what you kill calculation. Kill nothing; you will earn nothing.

This sounds fair, but as we noted last week it's not that simple. In investment banking in particular, responsibility for originating deals can be unclear. HSBC has a complex origination structure involving sector specialists, product specialists and investment and corporate bankers. All will want their share.

"Many people are worried that compensation this year will not be allocated on a meritocratic basis," says one HSBC managing director (MD). "It's not eat what you kill here. It's eat if you're friends with the right senior people."

A spokesperson for HSBC said: “We are committed to attracting and retaining talent as part of a high-performance culture, ensuring our employees are rewarded competitively.” 

Some insiders insist their apprehension is nonetheless valid. Veterans at the bank object to the ex-Citi people who occupy senior positions. "It's become my way or the highway," says one. Insiders point to 25+ exits from the US debt capital markets business in particular in the past few years, with some people leaving of their own volition for lesser platforms or without jobs to go to. 

Unfair bonuses in the past may have triggered those exits. "There's a difference between where revenues are booked and where they're originated," claims one HSBC banker.  "Some people have received preferential treatment," says another, who quit.

HSBC has hired alongside its exits. The bank added Jake Hartman from Barclays last August as head of FIG DCM; Margaret Szczerbicki joined on the US syndicate desk in December.

For all the complaints, it's also possible that bonuses at HSBC really needed to change.

In last year's bonus round, the bank paid its 135 material risk takers (typically MDs and other senior staff) an average of $1.4m each in combined salary and bonus. Some of its MDs may not have been deserving of this. 

HSBC announced the closure its M&A and ECM businesses outside of Asia and the Middle East in January 2025. One senior executive subsequently told the Financial Times that people had been paid despite originating no deals. If they're still there this year, they will be paid commensurate with that.

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