More than 50 employees from HSBC (NYSE:HSBC) have left the company's Hong Kong office for jobs at Chinese investment banks in the city after disagreements with the British bank on its new bonus policy, the South China Morning Post, or SCMP, reported Tuesday, citing sources.
Some of the bankers from HSBC have reportedly joined BOC International (HKG:2388), or BOCI, the offshore investment-banking arm of the Bank of China, which is one of four major state-run lenders, based in Hong Kong, while more than a dozen people joined China Merchant’s Securities (SHA:600999), or CMS, in the company's Hong Kong office.
“[The former HSBC staff] are extremely unhappy with HSBC’s decision to suddenly change their income package, and many of them have worked for HSBC for many years, so they are very experienced and know their clients very well,” a source involved in the hiring process for the Chinese investment banks reportedly told SCMP. “In the financial industry, it’s all about money. It’s just that simple.”
HSBC changed its salary framework last year -- to work around the European Union's restrictions on bonuses limiting them to a maximum of 200 percent of an employee's salary -- from a commission-based package based on sales volume to one with a fixed-pay allowance. This change reportedly upset star performers who generated big sales for the bank but stood to lose out on bonus earnings because of the new rule.
Some banks like HSBC are attempting to trim their retail-brokerage services, while others that are relatively new to Hong Kong are working to expand, further increasing competition in a tough market, according to SCMP.
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Li Tong, the daughter of China's former propaganda chief Li Changchun, currently runs BOCI. CMS is controlled by China’s Merchant Chambers, which is run by the Chinese government and is the most capital-rich industrial enterprise owned by it, according to SCMP.
“The new scheme aims to reward our staff on client experience, sales quality and values measures in a globally consistent way by removing all product sales incentives,” a HSBC spokesman reportedly told SCMP in an e-mail. “This is not in any way an exercise to lay off staff.”