HSBC's enormous bonuses follow 500 job cuts in the investment bank
As we noted earlier, this year was a good year for HSBC bonuses. The bank made more millionaires than in any year since at least 2019, the overall HSBC bonus pool was at its highest level since 2013 and spending on bonuses for material risk-takers was up 6.5% year-on-year to $772k each.
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However, not all HSBC employees are sharing the bounty. HSBC made some cuts to its investment bank last week before announcing today's bonuses. And in the past year, 554 people were let go from the global banking and markets business (GBM).
The cuts, which amounted to only 1% of the headcount of 48,000 people in the division, followed a disastrous year for the equities business, which is now run out of Hong Kong. Equities sales and trading revenues at HSBC fell 45% last year by virtue of what the bank described as 'lower client activity as a result of reduced market volatility.' However, net operating income in GBM was up 10% on strong growth in debt capital markets (DCM) business and FX trading. The latter occurred despite a $500m loss on the Argentine peso, which was not quite as bad as the $1.3bn set aside by Citi to cover its own losses on the peso's devaluation.
Geographically, HSBC cut nearly 700 people from its North American business, although this wasn't limited to GBM. It also cut 1,371 contractors globally - 23% of the total - as it pruned costs.
If you were lucky, leaving HSBC could be as lucrative as staying around for this year's bonuses. The bank revealed today that it let go of 60 material risk takers (senior traders and other people whose activities impact the bank) in 2023. It paid them an average of $617k in severance payments. One fortunate person was paid $3.4m to go away.
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