HSBC to phase out fixed-pay allowances from 2028

HSBC Plans to End Fixed-Pay Allowances for Employees from 2028

HSBC's Compensation Changes and Regulatory Context

By Yantoultra Ngui

Phase-Out of Fixed-Pay Allowances

HONG KONG, Oct 12 (Reuters) - HSBC will phase out fixed-pay allowances for staff from January 2028, an internal memo seen by Reuters showed on Monday.

Regulatory Changes Impacting Pay Structure

The move follows UK regulatory changes that removed a 2:1 cap on variable-to-fixed pay, the memo said, which had limited the proportion of an employee's total compensation that could be paid in bonuses.

Definition and Purpose of Fixed-Pay Allowances

Fixed-pay allowances are amounts paid by companies on top of base salary, typically for specified expenses such as commuting.

Implications for Employees

HSBC said base salaries would not be reduced and its approach to total compensation would not change. 

Staff affected by the move may have more of their compensation paid through variable pay, such as bonuses.

HSBC's Rationale and Strategic Direction

"As a global bank, adapting our approach in this way strengthens our ability to pay for performance, better differentiate, attract the best talent, and recognise those who deliver the best outcomes for our customers, clients and stakeholders," an HSBC spokesperson said.

Leadership and Organisational Restructuring

HSBC has been reshaping its business under CEO Georges Elhedery, who took the role in September 2024, merging some businesses and splitting its structure into four main units. 

(Reporting by Yantoultra Ngui; Editing by Jan Harvey)