HSBC reviews HK$300,000-per-kid school fee perk for Hong Kong bankers to cut costs

[HONG KONG] HSBC Holdings is reviewing a long-standing perk that covers school fees for a swath of bankers in Hong Kong as part of a broader push to standardise benefits globally and reduce costs, according to sources familiar with the matter.

The London-headquartered bank is considering options including scrapping the perk for new joiners or adjusting total compensation, the sources said, asking not to be identified discussing internal deliberations. HSBC has been reviewing the benefit for some time and no decisions have yet been made, they said.

Hong Kong is the largest market for the UK lender and the only major hub where staff in the mid-level and above are entitled to a subsidy that covers 95 per cent of school fees up to HK$220,000 (S$35,808) for each child in primary school and HK$300,000 per kid in secondary school annually.

Hundreds of staff have access to the perk, which costs tens of millions of US dollars annually, one of the sources said. Since it is not offered in other key hubs, it has become a source of tension for the head office in London, the sources said. The subsidy is not offered to staff of Hang Seng Bank, the Hong Kong unit HSBC acquired in full recently.

The bank is focused on rewarding “employees fairly and competitively, on the basis of their performance”, said a spokesperson for HSBC. “Employees in Hong Kong have access to broad professional development opportunities, and a competitive pay and benefits package.”

Under CEO Georges Elhedery, HSBC has been undergoing the biggest overhaul in a decade, including thousands of job cuts across businesses and the thinning of management layers. In a recent interview with Bloomberg Television, he said that he’s “ruthless about killing complexity” in his push to make the lender simpler and agile.

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International school fees are a major expense for families in Hong Kong and costs have been increasing after the pandemic, with an influx of Chinese workers lured by Hong Kong’s talent visa programme. Annual tuition alone can reach more than HK$260,000 in some institutions. Many high-income residents in the Asian financial hub, especially expats, view education in elite international schools as an essential credential to boost their child’s chance of future success.

While HSBC’s salaries and bonuses lag behind its Wall Street rivals, it’s dangled generous benefits, including club memberships and cheap mortgages, to attract recruits. Some perks are gradually being phased out, with HSBC getting rid of general managers a few years ago. That title came with abundant insurance coverage.

The British lender said in February that it expects to achieve a US$1.5 billion in cost-savings target in the first half of this year, six months ahead of schedule. It lifted its return on tangible equity targets to 17 per cent or better for this year and the following two. BLOOMBERG