Finance

HSBC hikes junior banker salaries to $100k as retention crisis grips finance

HSBC joined its rivals, becoming one of the last banks to increase analyst salaries as competition for junior investment bankers heats up. 

The UK lender has hiked salaries to $100,000 for first year analysts within its investment banking unit, according to people familiar with the matter, up from the current rate of $85,000.

HSBC runs a two and half year analyst programme, and similar pay rises were rolled out to those further up the ranks in May. Analysts were told about the pay rise on 3 August.

As a retention crisis grips the industry, the rise matches some rivals, with JPMorgan, Citigroup, Barclays, Credit Suisse, Deutsche BankNomura, Morgan Stanley and UBS all increasing first year analyst salaries to $100,000 from around $85,000 over the past few weeks.

This means a near universal 18% pay rise for those joining the lowest rung of an investment bank in a matter of weeks as small and large players alike have moved to stem an exodus of junior talent amid a record deal boom.

Goldman Sachs has increased entry-level salaries from $85,000 to $110,000, however, while hiking pay to $125,000 for analysts in their second year. For those moving up to associate level, pay before bonus is now $150,000. It was the last big Wall Street investment bank to increase pay.

Independent banks including Rothschild, Lazard, William Blair and Baird have also hiked junior pay, often beyond their bulge bracket rivals. Rothschild has increased base salaries for first year analysts to $105,000, while William Blair and Baird both raised entry-level pay to $110,000.

READ Credit Suisse set to join Wall Street in raising junior pay to $100,000 amid banker talent war

The ongoing moves by investment banks to increase pay for their junior bankers comes amid a broader burnout crisis in the industry. Banks have scrambled to hire more analysts and associates amid an unprecedented deal boom this year that has brought in a record $60bn in fees.

In April, HSBC laid out a number of new initiatives for junior bankers including accelerated promotions for its associates, speeding up and increasing recruitment, enforcing working limits and potentially increasing pay for its analysts and associates.

“Our objective is clear: we want to attract, develop and retain individuals who value our diverse, inclusive and high-performing culture,” the memo announcing the initiatives, seen by Financial News, said.

READ ‘There is a deep supply of type-A’s’: Why the gruelling life of bankers will never change

The focus on junior workload comes after a leaked presentation by a group of 13 US-based Goldman Sachs analysts, which outlined declining mental and physical health during a sustained run of 100-hour weeks.

While six-figure starting salaries have become the norm, banks have also responded with recruitment sprees and one-off bonuses. JPMorgan has hired an additional 190 analysts and associates, while Credit Suisse and boutique Moelis & Co have both rolled out so-called lifestyle bonuses for juniors.

To contact the author of this story with feedback or news, email Paul Clarke

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