HSBC is trimming one of Hong Kong banking's richest extras, stopping the school-fee subsidy for people newly hired in the city and for senior employees relocating there. The update went to staff in a memo from David Liao and Surendra Rosha, co-heads of Asia and the Middle East, and an HSBC spokesperson confirmed the details.
"We are focused on rewarding our employees fairly and competitively," the spokesperson said. "HSBC employees in Hong Kong have access to a broad and market-competitive total reward package." Liao and Rosha told employees, "We know the education benefit is very important for many colleagues and their families," adding the review "minimizes the uncertainty for those who are currently claiming and provides clarity on the position for the future."
Hong Kong was the bank's only major hub where mid-level and senior staff could claim an education subsidy that covered 95% of school fees, with annual caps of HK$220,000 for each primary-school child and HK$300,000 per secondary-school child. Hundreds of employees have used it, costing the bank tens of millions of dollars a year, and it has stirred tensions at the London headquarters, where there is no equivalent support. The perk is likewise absent for employees of Hang Seng Bank Ltd., which HSBC recently bought out in full as its Hong Kong arm.
Employees already at band three and managing directors who currently receive the allowance will continue to get it. New hires and staff transferring into those bands will not be eligible.
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Chief Executive Officer Georges Elhedery is steering the most significant revamp in ten years, including a flatter management setup and thousands of job reductions spanning its worldwide network. He has quickened the pace at Europe's largest bank by selling assets and streamlining operations. In August, HSBC said it now expects the overhaul to deliver $2 billion in overall cost savings, up from the earlier $1.5 billion goal. The timing also coincides with the relocation of Aileen Taylor, the chief people and governance officer, to Hong Kong.
International school fees in Hong Kong have become a heavier burden for both expatriate and local families, with costs rising after the pandemic and pressure increasing alongside an influx of mainland Chinese professionals through the territory's talent visa program. The allowance has long helped HSBC land director-level hires even when base pay lagged Wall Street rivals.
Hong Kong is HSBC's largest market, with its local business employing more than 30,000 people, and in the first half of the year the bank generated $7.8 billion in pretax profit there. The shares fell 0.7% in Hong Kong, yet they are up 31% year to date. Cutting a pricey benefit like this signals management is serious about pulling costs lower while trying to keep pay packages competitive.
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