HSBC’s pay raise reflects the aggressive industry battle to keep talent

The backstory:

• Wall Street has been aggressively hiking pay, with The Goldman Sachs Group, Inc. paying 23% more per employee on average for the past year. This increase marks the biggest jump in over a decade. Morgan Stanley and JP Morgan Chase & Co. have also raised pay up to 50% in order to retain their best talent.

• Earlier this year, the chief executive officers of the respective companies were each awarded around US$35 million for their work last year, which marks the most their banks have spent on a CEO since 2007.

• According to industry veterans, the last time banks were this generous was in 2009. Now, people are pointing to the parallels created in the pandemic. As commerce shut down in 2020, government programs and a Federal Reserve stimulus propped up the economy, unleashing a frenzy of trading and corporate dealmaking.

The development:

• In a bid to keep its talent from joining Wall Street rivals and crypto, HSBC Holdings plc is planning to double the bonuses for junior investment bankers and traders.

• The company is planning to report its full year of earnings next week and is in the middle of pivoting its business more toward Asia, where it generates most of its money. Part of this pivot has included relocating some senior management to Hong Kong.

• This pay hike comes after the bank paid less than most other players a year ago when it cut its bonus pool by 15%.

• According to people familiar with the situation, more senior staff are due for 2021 bonus hikes of at least 10%.

• A spokesman for HSBC declined to comment.

You drive the stories at TMS. DM us which headline you want us to explain, or email us.