LONDON – HSBC Holdings will phase out fixed-pay allowances for its senior staff and instead hand out a greater proportion of its compensation in the form of bonuses, becoming the latest British lender to switch to Wall Street-style remuneration to better align with performance.
The London-headquartered bank will switch to the new pay system at the start of 2028, according to a memo seen by Bloomberg News.
The approach “strengthens our ability to pay for performance, better differentiate, attract the best talent, and recognise” top performers, a spokesman for HSBC said in a statement.
HSBC’s shift follows a similar update from Barclays, which said in July it would switch more of its employees’ pay toward bonuses after Britain changed its rules around compensation in 2025 to allow for higher variable pay in an effort to boost domestic competitiveness.
Wall Street bankers have typically received the bulk of their pay through bonuses tied to performance, rather than fixed salaries.
Fixed pay allowances were introduced more than a decade ago at major British banks to provide a way of topping the base salary of senior staff after the introduction of European Union rules capping the compensation of financiers.
At HSBC, those allowances have taken the form of share awards in immediately vested stock, though these have been subject to a retention period to ensure alignment between an executive’s interests and those of the bank.
These payouts are non-pensionable and have been capped at a maximum of 150% of an individual’s base salary under the terms of HSBC’s fixed-pay structure.
In its most recent annual report, HSBC said fixed pay remained the largest part of its bankers’ compensation.
The UK rule changes have now lessened the need for these fixed-pay allowances.
The lender spent US$3.93 billion (S$5.03 billion) in 2025 on variable pay, up 10% from the previous year, according to the annual report.
Gross compensation and benefits stood at US$21.5 billion in 2025.
The planned compensation overhaul is part of a broader restructuring HSBC has seen since Georges Elhedery took over as chief executive officer in September 2024.
His shake-up of the lender has resulted in the sale, closing or merger of several businesses and hundreds of job cuts.
The CEO has also led a cost-cutting programme that has included the paring back of long-time benefits enjoyed by some of the company’s staff such as education allowances and contributions to private club memberships for employees of its Hong Kong-based business.
In the Asian hub, the lender ended a long-standing education subsidy covering 95% of school fees for the children of new hires and senior staff relocating to the city.
Existing band-three employees and managing directors who already receive the benefit will retain it, Bloomberg News reported in September.
It is also cutting a perk worth up to HK$200,000 ($25,485) that subsidised some private club access for its bankers in the city.
The share price of HSBC has more than doubled since Elhedery became CEO. BLOOMBERG
