[UK] Senior dealmaker salaries cut by up to 25% at HSBC

HSBC intends to cut salaries for some of its newly-promoted managing directors by up to 25 per cent in the latest indication that the forthcoming end of the UK bonus cap could prompt banks to overhaul pay, Financial News reports.

HSBC will now offer salaries of £225,000 to some senior investment bankers, according to Bloomberg reporting. The new salary will be for newly-promoted managing directors, those currently in the role are earning £300,000.

The UK lender's new salaries will only affect some senior investment bankers and will not be applied across its global banking and markets unit, a person familiar with the matter reportedly said. They reportedly added that the salary changes are not directly related to the UK government's plans to lift the bonus cap.

In September, the government announced plans to scrap a bonus cap for bankers that had been in place since 2014 as European regulators sought to bring excessive risk-taking under control in the wake of the financial crisis.

Banks continue to consult with the government about lifting the cap but some firms have already started to change the way they pay their investment bankers. Goldman Sachs, JPMorgan and Morgan Stanley are reportedly among the banks considering scrapping ‘role-based allowances’ for their senior bankers.

These payments are made on top of base salaries and were introduced to get around the EU's cap on bonuses, which limits variable pay to 100 per cent of salary. They can make up 30-40 per cent of monthly income.

The government’s consultation will end on March 31. It is expected to publish findings before mid-year.

Government officials and a consultation paper by the Bank of England have reportedly argued that the bonus cap has not reduced overall pay for bankers as lenders have instead restructured their packages to compensate their employees.

Senior bankers previously told Financial News that they were reluctant to overhaul their pay practices until there is more clarity on the bonus cap.

"What we want to see is consistency - if we change the way we reward our employees, we want to make sure it stands the test of time, rather than another chancellor coming in and switching it back again," the global head of investment banking at a Wall Street firm in London told FN.

Source: Financial News

(Quote via original reporting)

HSBC intends to cut salaries for some of its newly-promoted managing directors by up to 25 per cent in the latest indication that the forthcoming end of the UK bonus cap could prompt banks to overhaul pay, Financial News reports.

HSBC will now offer salaries of £225,000 to some senior investment bankers, according to Bloomberg reporting. The new salary will be for newly-promoted managing directors, those currently in the role are earning £300,000.

The UK lender's new salaries will only affect some senior investment bankers and will not be applied across its global banking and markets unit, a person familiar with the matter reportedly said. They reportedly added that the salary changes are not directly related to the UK government's plans to lift the bonus cap.

In September, the government announced plans to scrap a bonus cap for bankers that had been in place since 2014 as European regulators sought to bring excessive risk-taking under control in the wake of the financial crisis.

Banks continue to consult with the government about lifting the cap but some firms have already started to change the way they pay their investment bankers. Goldman Sachs, JPMorgan and Morgan Stanley are reportedly among the banks considering scrapping ‘role-based allowances’ for their senior bankers.

These payments are made on top of base salaries and were introduced to get around the EU's cap on bonuses, which limits variable pay to 100 per cent of salary. They can make up 30-40 per cent of monthly income.

The government’s consultation will end on March 31. It is expected to publish findings before mid-year.

Government officials and a consultation paper by the Bank of England have reportedly argued that the bonus cap has not reduced overall pay for bankers as lenders have instead restructured their packages to compensate their employees.

Senior bankers previously told Financial News that they were reluctant to overhaul their pay practices until there is more clarity on the bonus cap.

"What we want to see is consistency - if we change the way we reward our employees, we want to make sure it stands the test of time, rather than another chancellor coming in and switching it back again," the global head of investment banking at a Wall Street firm in London told FN.

Source: Financial News

(Quote via original reporting)