HSBC cuts London salaries 25%; Credit Suisse increases some 30%
As widely predicted, banks in London are cutting salaries in response to government plans to lift the bonus cap. HSBC has taken the lead and slashed London salaries by 25% for its newly promoted managing directors. Whereas new London MDs at HSBC earned £300k in 2022, the class of 2023 is on £225k instead.
Other banks are expected to follow HSBC's lead. Banks like Goldman Sachs and Morgan Stanley are understood to be reviewing their compensation policies. As we reported previously, banks are widely expected to scrap the generous 'allowances' that have been used to boost fixed pay.
Banks in London hiked salaries and introduced allowances when the bonus cap was introduced in 2014. The cap restricts bonuses to no more than twice fixed pay. By increasing fixed pay, banks were able to continue paying staff at a level similar to that seen previously. Now that the bonus cap is being lifted, banks can flex bonuses instead.
While HSBC has cut new MD salaries in response to the end of the cap, other banks are doing the opposite. One London headhunter says Credit Suisse has been increasing salaries for some targeted fixed income salespeople and traders by 25%-30% following widespread exits in the credit team. This follows last year's 50% reduction in the CS bonus pool. Credit Suisse declined to comment, but the increases are not understood to apply across the board.
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