HSBC is cutting 40%+ of senior staff while intimating pay of $1.4m+
HSBC is cutting costs. It's asking senior people in the corporate and investment bank to apply again for their jobs. It's squeezing travel budgets. It's ejected eight people, or around 40% of its executive committee. Now, Bloomberg says the bank is also cutting 40% of its most senior managers across the bank as it trims $3bn from expenses.
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There are 175 people in HSBC's senior management category; 70 will presumably disappear as a result of the cuts. Under HSBC's historic hierarchy they would presumably have been designated Group General Manager, GCB1 where 'GCB' stands for 'Global Career Band.' HSBC is also understood to demoting some of its general managers and making them mere managing directors (MDs) instead. This will be the second time this has happened: in 2022, HSBC already redesignated all its Group General Manager GCB2s as mere MDs too.
The cuts should not come as a surprise. HSBC's new CEO, Georges Elhedery, has been talking about cutting senior jobs since October. However, while HSBC is being harsh with its most senior managers, it doesn't seem to be changing the mood music on its bonus promises to everyone else.
Also in October, HSBC revealed that it had set aside an additional $300m for bonuses in the first nine months of 2024, implying that this year's bonuses at the bank will be better than last year's, when the 503 material risk-takers in what was then known as the global banking and markets division earned an average of $1.4m each.
Material risk-takers are typically managing directors, although not necessarily 'GCB1s'. As HSBC cuts costs, though, it seems reasonable to wonder whether October's bonus promise will still hold, or whether bonus allocations will now be trimmed year-on-year in the fourth quarter.
HSBC doesn't break out compensation spending on a divisional basis, but in the third quarter of 2024, compensation accounted for 58% of expenditure across the bank. And at the higher echelons of the hierarchy, some people have historically been paid very well indeed. HSBC's managing directors could be in for an unpleasant surprise.
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