HSBC to cut year-end bonuses for junior staff by 22.5 per cent as coronavirus pandemic weighs on performance
- HSBC’s profit in the first nine months of 2020 fell by 62 per cent as business activity weakened during pandemic
- Total compensation for affected employees is mostly flat or slightly up year-on-year, HSBC spokeswoman said
“The challenging external environment in 2020 has had a significant impact on business and group performance with reported profit in our Q3 YTD results down 62 per cent and adjusted profit down 44 per cent,” the memo said. “It is appropriate that we adjust the [streamlined variable pay] grid as a result.”
Variable pay was only reduced by 22.5 per cent to “reflect the exceptional performance of staff in supporting customers and each other and helping to build the bank for the future,” a spokeswoman said. Total compensation for affected employees is mostly flat or slightly up from the previous year as a result, she said.
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Employees in the streamlined variable pay programme receive a discretionary bonus in February of the following year based on their performance and behaviour ratings, which is calculated using a formula. Most of its junior staff globally fall within the programme.
For example, top performers in grades 6 to 8 would receive a bonus equivalent to about 2.3 times one month’s salary under the revised formula.
The London-based lender’s employees fall within grades zero to 8, with zero representing its most senior leaders.
The bonus cut comes after HSBC, Europe’s biggest bank by assets, and other lenders navigated a difficult operating environment in 2020 as the coronavirus pandemic weighed on growth and forced cities from London to Singapore into months-long lockdowns.
Banks benefited from a favourable trading environment last year as stock markets soared, but also were hit hard as central banks kept interest rates at historic lows to stimulate economies globally.
New accounting standards adopted by HSBC and its rivals in 2018 require banks to recognise potential credit losses over the life of a loan and more aggressively write down loans if they have experienced a significant increase in credit risk.
HSBC, which generates much of its profit in Asia, is set to report its full-year results in February.