It's HSBC results day and things are looking promising when it comes to HSBC bonuses. As Financial News pointed out, HSBC hiked the bonus pool for material risk-takers (its most senior bankers and traders) in its investment bank in 2021 by 53% compared to 2020. And as Bloomberg observes, the bonus pool across the bank as a whole is up by a third.
What does this mean in practice? As the chart below shows, the average of HSBC's 505 material risk-takers received total compensation of nearly $1.5m last year, up 30% on 2020. The increase was driven by a huge 63% increase in individual bonuses for top performers, itself powered by the rising bonus pool plus the fact that there was a smaller number of people to receive it - HSBC dispensed with 36 of its risk-takers in 2021.
The upshot is that compensation for top performers at HSBC is now looking a bit like compensation for top performers at Goldman Sachs, two years ago. Because it's not based in Europe, Goldman isn't compelled to make a detailed global disclosure for its risk-taker pay, but it does disclose compensation for its risk-takers in London. The most recently available figures, for 2020, show Goldman paying 558 London risk-takers an average of $1.4m. HSBC is part of the major league.
Except...Goldman Sachs is likely to have hiked its own risk-taker pay considerably higher this year following purported increases to its bonus pool of 40% or more (in investment banking at least). We won't know Goldman's actual risk-taker pay in the UK for 2021 until it makes a regulatory filing later this year, but average compensation per head of $1.7m for GS material risk-takers in 2021 doesn't seem out of the question.
This is not to disparage HSBC's big pay hike. 174 people at the bank are now earning over €1m, compared to 144 in 2020, and one mysterious person at the bank earned over €10m. HSBC is looking pretty generous compared to Standard Chartered, where the average material risk-taker earned $979k last year, and to NatWest Markets where the comparable figure was $887k.
Who are these fortunate people in HSBC's global banking and markets division? Material risk-takers are typically managing directors or senior bankers and traders. Some of last year's highest performers at HSBC appear to have been in equities, where revenues were up 45% year-on-year. The bank flagged the benefits of "volatility in Asian markets" in particular, so Hong Kong equity traders seem likely to have featured among the highest earners.
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