HSBC, one of the UK’s top lenders, rewarded its top investment bankers with an average bonus of $771,700 last year, marking a 15% increase. This boost in bonuses came as the bank reported record profits and decided to raise variable remuneration across its operations.
Increased Bonuses for Material Risk Takers
The bank allocated $392m in bonuses to its 508 material risk takers within the investment bank, a key group of employees whose decisions could impact the bank’s overall risk profile. This amount represented a notable increase from the $368.6m recorded in the previous year, despite a reduction in the number of staff within this division.
On average, each material risk taker received $771,700 in bonuses, compared to $672,000 in the previous performance cycle. While this was a slight decrease from the $810,000 awarded the year before, it still reflected a substantial payout for these key individuals.
Generous Compensation Trends
In total, HSBC spent $712.7m on pay for its material risk takers within the investment bank, resulting in an average payout of $1.4m when including salaries. This figure represented an increase from the $1.3m recorded in the prior year, showcasing a trend of generous compensation within the organization.
The bank’s impressive financial performance translated into a record annual profit of $13.3bn for 2023. In line with this success, HSBC distributed an overall bonus pool of $3.8bn for the year, marking a 12% rise from the previous period. Furthermore, CEO Noel Quinn’s compensation saw a substantial increase to $10.6m, boosted by more than $5m in long-term incentive awards compared to the prior year.
These developments underscore HSBC’s commitment to rewarding its top talent while driving strong financial results in a competitive market environment.
High Pay at Major Banks Revealed
At HSBC, a total of 512 individuals were compensated over €1m, which marked an increase from 473 individuals in the previous year. Notably, an employee at the bank received a staggering €12m for the last fiscal year, while another employee earned over €11m in 2022.
Bonus Continuity at Barclays UK
Barclays UK (BARC) kept bonus payments consistent for its Most Rewarding Talents (MRTs) who operate within the investment bank, with each receiving £642,100 ($810,600), aligning with figures from the previous year. Despite an overall 3% decrease in variable payments across the staff, top-tier employees within this division secured an average of £1.3m for the financial year.
Rising Compensation for NatWest UK MRTs
NatWest UK (NWG) disclosed in its annual report released on 16 February that its MRTs were compensated an average of £444,679 in the past year. This figure represented an approximately 2.5% increase in average payments combining both salary and bonuses from the year 2022.
Decline in Bonuses Across the Industry
Across the board, banks have significantly reduced bonus payouts this year. Major players including Morgan Stanley and Citigroup saw notable drops of 15% and 20%, respectively, for their dealmakers. Deal-making activities experienced a 15% decline compared to the already subdued levels of 2022, leading M&A bankers to anticipate bonuses that could potentially be 25% smaller, based on estimates from Wall Street compensation consultants Johnson Associates.
