HSBC cuts back US$38,000-per-kid school perk for some Hong Kong bankers

[SINGAPORE] HSBC ended a long-standing education benefit for new hires in Hong Kong and for senior staff transferring to the city, cutting back one of the city’s most generous banking perks as chief executive officer Georges Elhedery plows ahead with a cost-trimming campaign.

Existing band-three employees and managing directors who already receive the benefit will retain it, according to a memo sent to staff by David Liao and Surendra Rosha, co-heads of the Asia and the Middle East business.

New recruits and transfers at those levels will no longer qualify. An HSBC spokesperson confirmed the contents of the memo.

“We are focused on rewarding our employees fairly and competitively,” the spokesperson said in an emailed statement.

“HSBC employees in Hong Kong have access to a broad and market-competitive total reward package.”

The decision scales back a historic benefit offered to a wide array of bankers.

Hong Kong is the UK lender’s largest market, as well as its only major hub where mid-level staff and above receive a subsidy covering 95 per cent of school fees up to HK$220,000 (US$28,042) annually per child in primary school and HK$300,000 per child in secondary school.

Hundreds of staff members have drawn on the perk, which costs tens of millions of dollars annually and has sparked internal friction at the bank’s London headquarters, where employees receive no equivalent subsidies.

The subsidy is also not offered to staff of Hang Seng Bank, the Hong Kong unit HSBC acquired in full recently.

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“We know the education benefit is very important for many colleagues and their families,” they said.

“After a careful review of this benefit, we can now provide you the update below. This minimises the uncertainty for those who are currently claiming and provides clarity on the position for the future.” 

Under Elhedery, HSBC is undergoing its biggest overhaul in a decade, including thousands of job cuts across global operations and a flattening of management layers.

The perk is being pared back just as Aileen Taylor, the bank’s chief people and governance officer, relocated to Hong Kong.

International school fees represent a major expense for expatriate and local families in Hong Kong. Costs have steadily increased following the pandemic, compounded by an influx of mainland Chinese professionals under the territory’s talent visa programme. 

The school subsidy has long been a powerful recruitment tool for many director-level hires. While HSBC’s base salaries frequently trail Wall Street rivals, its comprehensive benefits have traditionally helped the bank retain and attract talent.

Elhedery has accelerated an overhaul of Europe’s largest bank through asset sales and operational simplification. In August, the lender said it expects its restructuring effort to yield US$2 billion in total cost savings, up from an earlier target of US$1.5 billion. 

HSBC employs more than 30,000 staff in its Hong Kong business segment. It generated US$7.8 billion in pre-tax profit in the city during the first half of the year. BLOOMBERG