HSBC Holdings Plc ended a long-standing education benefit for new joiners in Hong Kong and for employees transferring to the city, cutting back one of the city’s most lucrative banking perks as Chief Executive Officer Georges Elhedery plows ahead with a cost-trimming campaign.
The perk will be retained for employees in band three and managing director roles who already receive the benefit, according to a person familiar with the decision. New joiners and transfers at that level will not receive the education benefit. An HSBC spokesman wasn’t immediately available for comment.
The move 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 percent of school fees up to HK$220,000 annually per child in primary school and HK$300,000 ($38,240) 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 don’t have equivalent subsidies, Bloomberg reported earlier. The subsidy is also not offered to staff of Hang Seng Bank Ltd, the Hong Kong unit HSBC acquired in full recently.
ALSO READ: HSBC mulls restructuring Singapore units to simplify operations
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.
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 $2 billion in total cost savings, up from an earlier target of $1.5 billion.
HSBC employs more than 30,000 staff in Hong Kong, where it generated $7.8 billion in pretax profit during the first half of the year.
