As bonus season approaches, sources say HSBC traders are particularly nervous about coming announcements. Even after a strong year in areas like rates trading, the bonus pool is likely to be down considerably.
Bonus apprehension at the international bank was detected before Christmas, when a survey by Emolument found that only 29% (the smallest proportion) of respondents at HSBC thought their bonuses would rise for 2019. Now, traders in HSBC's rates businesses in both London and New York tell us they're expecting cuts of 20% to 30%.
HSBC isn't commenting on its bonuses, and its allocations to particular businesses haven't been fixed yet. However, Bloomberg reportedly previously that the bonus pool for HSBC global markets division as a whole is likely to be down in the mid to high teens for 2019 compared to 2018.
HSBC's rates traders say big cuts to the bonus pool will be particularly galling because 2019 was a good year. Rates revenues were $1.2bn for the first nine months versus nearly $1.5bn for 2018 as a whole. However, HSBC is preparing to announce a new strategy under interim boss Noel Quinn and is expected to cut costs in the (allegedly) loss making European global banking and markets business in particular.
HSBC isn't the only business with a new boss where traders are worried about coming bonuses. Sources say macro traders at Natwest Markets are also bracing for the worst. RBS (which owns Natwest Markets) also has a new CEO in the form of Alison Rose, who is also planning to cut costs. It doesn't help that the third quarter was absolutely terrible for Natwest rates traders - mostly, apparently, due to the business in Europe. Traders at the bank in the U.S. had a good year, but fear big pay cuts anyway.
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