HONG KONG/LONDON (Feb 22): HSBC Holdings plc boosted its overall bonus pool by almost a third to US$3.5 billion in part to retain staff, the latest example of how an industry-wide race for talent is pushing up costs.

"2021 was characterised by a sharp economic rebound and an extraordinarily competitive labour market," HSBC said in its annual report. "It is critical for our long-term performance that we continue to attract and retain the talent necessary to deliver our strategic priorities."

The jump comes after the bank cut variable pay by 20.4% to US$2.66 billion for 2020.

Lenders across Wall Street and in Europe are ramping up staff awards as competition for talent increases after the pandemic-fuelled trading and mergers boom. Dealmakers at Morgan Stanley, JPMorgan Chase & Co, and Goldman Sachs Group Inc received bonus increases of as much as 30%, 40%, and 50%, causing those banks to incur some of the highest personnel expenses in years. Goldman Sachs is paying an average of 23% more per employee for last year.

HSBC's US$3.495 billion variable pay pool for 2021 is the highest since a US$3.66 billion payout in 2014. The total pay and benefits for the median employee for 2021 was £54,678 (US$74,200), a 12% increase compared with 2020.

The UK lender said that the total compensation across all its businesses was up relative to 2020, and for junior staff, the increase was "slightly lower" as they were protected against material volatility in the previous year. Fixed-pay increases were targeted at junior staff to help address the impact of rising inflation, according to the annual report.

This month, Bloomberg reported that some junior bankers at HSBC could receive bonuses worth up to 100% more than what they received last year. More senior staff were expected to receive at least an average of at least a 10% increase in their bonuses.

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