HSBC Set To Double Bonuses For Junior Bankers To Staunch Defections

HSBC looks like it is the latest bank to ramp up pay for its junior bankers, following a trend of aggressively trying to retain talent that has been taking Wall Street by storm over the last 2 years. 

The bank is reportedly planning on doubling bonuses for some of its junior investment bankers and traders, Bloomberg reported on Monday. 

It’ll be a change for the bank, which paid “less than most rivals a year ago after cutting the bonus pool at its global banking and markets division by 15%,” the report said. 

“We’ve got to keep pay across the board competitive,” Greg Guyett, co-head of GBM for HSBC said last month. And the competition in the space is real, with investment banks jostling back-and-forth to stay competitive with pay and retain talent for several years now.

But HSBC Chief Executive Officer Noel Quinn previously had to tell his staff that the effects of Covid had prevented the bank from increasing performance bonuses over the last year, largely due to underperformance by the bank on a broad scale. The bank made changes to its promotion pathways and hiked base pay for some junior bankers, Bloomberg reported, instead. 

Recall, just last month we reported that JP Morgan had raised its junior bankers’ pay for the second time in a 12 month period. 1st-year investment banking analysts are now set to make $110,000, up from $100,000, The Business Times reported last month. 2nd-year analyst pay will also jump up to $125,000 and 3rd-year pay will rise to $135,000. 

Citigroup also said it was increasing pay after a blockbuster year in 2021, moving base salaries for junior bankers up to $110,000. 

Despite the pay raises, it looks like the attitude on Wall Street could be shifting away from coddling junior bankers, we noted late last year, which banks have been doing ever since rogue Goldman Sachs employees made and publicized a slide deck about how tough working conditions were at the bank.

Recall in November 2021, we noted that Morgan Stanley was also pushing junior bankers to get back to the office. Morgan Stanley’s CEO James Gorman led the charge to return to normal late last year. Chris O’Dea, a Morgan Stanley managing director, said on a conference call to employees late last year: “If you’re 21 to 35, you are nuts not to be in the office all the time.”

Gorman threatened a pay cut for those who didn’t come back to the office last year. He said last summer: “I fundamentally believe the way you and I develop our career is by being mentored and by watching and experiencing the professional skills of those who came before us. You can’t do that sitting at home by yourself — there’s a limit to Zoom technology.”

Gorman may be taking his cues from Cantor Fitzgerald’s CEO, Howard Lutnick, who was the first to vocally push back on junior bankers this past summer. Lutnick said that junior bankers complaining about long hours and stressful demands should “rethink their career choice”.

Lutnick’s comments followed 13 junior bankers at Goldman complaining about their workload early in 2021 in a slide deck that was released to the public. They claimed to be working 100 hour weeks and experiencing declining physical and mental health. The public scrutiny caused other banks to offer bonuses and rewards to retain their younger talent.

Recall, last year, we noted that Evercore was now paying its junior bankers up to $120,000 per year. Second year analysts at Evercore will make $130,000 and third year analysts will make $140,000. 

Guggenheim has also raised its first year analyst pay to $110,000. First-year analysts across the global corporate and investment banking, markets, and research at Bank of America will now receive $100,000 per year, up from $95,000. Second year analysts will make $105,000 per year and third year analysts will make $110,000. 

Last year we also noted that Jefferies announced it was going to be raising pay for its first year analysts in the U.S. to $110,000. The bump in pay is a raise of $25,000 from their previous starting salary of $85,000 per year. Second year analysts will make $125,000, up from $95,000 and third year analysts, called associates, will move up to $150,000 per year from $125,000. 

Lutnick said it best last summer: “Young bankers who decide they’re working too hard — choose another living is my view. These are hard jobs.”