Last week's disclosure that HSBC will not pay bonuses to its equity cash and derivatives professionals had rivals and headhunters abuzz with speculation this sounds the death knell of the firm's investment banking pretensions. Although bonuses are down around 30-50% across the board in equities, market professionals said HSBC's apparent decision to do away with them altogether is unprecedented.
Mark Ramsay, head of global equity-linked products at HSBC in London, referred questions to Adrian Russell, spokesman. Russell said the firm's equity group "was and is a core part of our business" and that "some individuals have been disappointed" by bonuses. HSBC cut 200 equity staffers late last year--far less than other banks--which partially explains the lack of bonuses. "We're not a gold rush boom and bust organization, full stop," he said.
Outsiders said morale is low at HSBC and equity staffers are looking for a way out. Johan Groothaert, managing director and head of equity structured products and alternative investments at Deutsche Bank in London, said, "we have received tens of C.V.s from HSBC." A headhunter added: "They all want to get out and who can blame them at this point?" However, a head of global equity derivatives in London said the team is regarded as a second-tier player and he doubts those seeking to leave will find many takers. Russell responded, "we're medium-sized but perfectly formed; for example we don't pretend we can compete with U.S. bulge-bracket banks in their domestic market."
