HSBC U-turn to end staff exodus

AN embarrassed HSBC has brought back a cash bonus scheme for key investment analysts after a decision to scrap it led to a wave of resignations.

Europe's biggest bank is now offering guaranteed cash bonuses in March to a select group of staff in an attempt to stop them joining rivals.

But they must pay the money back if they leave the bank within 12 months.

HSBC stunned the City in February when it decided not to pay cash bonuses to analysts, though the bank did pay some bonuses in the form of HSBC shares.

A total of 30 equity analysts have defected to the competition since HSBC stopped paying bonuses - confirming the widely held City view that these are essential as a way of keeping key staff.

'This smacks of bolting the stable door after the horse has bolted,' said one insider.

The most recent departures from the bank include Matthew Lloyd, head of support services, and Patrick Houston, head of specialist sales.

They are both joining Dutch bank ABN Amro, which has hired 12 analysts from HSBC this year.

The highest-profile defections were those of Mark Brown, HSBC's global head of research, who is going to ABN Amro, and highly regarded banks analyst Michael Lever.

He moved with three of his team to Credit Suisse First Boston. ABN Amro is also taking on HSBC's media research team.

HSBC refused to comment on its bonus scheme. But the bank will now be hoping to stem the staff exodus, which was watched closely by rivals keen to see whether they, too, could get away with copying the controversial policy.

HSBC has traditionally kept a tight grip on its pursestrings and has tried to encourage staff to develop loyalty rather than expect spectacular payouts at the end of each year.

Until recently, even the bank's leading executives were not among the City's top earners. Keith Whitson, group chief executive, was paid a salary of £767,000 last year, plus a bonus of £700,000. By comparison, Barclays chief executive Matt Barrett recently signed a new contract worth as much as £15 million over the next three years.