HSBC Rethinks Bonuses

Even those few who were paid bonuses, which were thought to be typically 40% of the previous year's figure, are disappointed and demotivated.

HSBC continues to lose top-rated analysts and sales staff and rivals Bank of America, Cazenove, Credit Suisse and JP Morgan have been able to tempt key staff away without much difficulty.

Many feel that HSBC needs to work out whether it wishes to really be a player in the investment banking world. If it does, then it will need to take a long-term look at the cyclical nature of the business and will have to appreciate that good staff can vote with their feet, even in the worst of times. Retaining them for when times improve is a key factor in acheiving success in the investment banking industry.

The bank is doing well in other areas and is currently making huge profits on the retail side. It can afford to take a more pragmatic view of its investment banking units and, unlike some of its pure brokerage rivals, has profits from other areas to ease it through tough times in investment banking.

If the bank continues to leak key staff and confuse the market about its intentions, it will find it increasingly difficult to retain and recruit in staff who can make a difference.