HSBC is reportedly reviewing a lucrative perk that covers school fees for its bankers in Hong Kong, as chief executive Georges Elhedery pushes ahead with a sweeping overhaul of Europe’s largest bank. The subsidy, which costs the lender tens of millions of dollars a year and benefits hundreds of staff in its most profitable market, is under scrutiny as part of a broader effort to cut costs and simplify operations.
According to sources familiar with the matter, no final decisions have been made. The bank is considering whether to scrap the benefit for new employees or adjust total compensation packages for existing staff. The review has been prompted, in part, by tension at HSBC’s London headquarters: the school fee subsidy is not offered in any of the bank’s other global hubs, making it an exclusive – and costly – exception for Hong Kong.
The perk covers 95% of annual school fees, capped at HK$220,000 (£20,700) per child for primary school and HK$300,000 (£23,400) per child for secondary school. For a banker with two children in secondary education, the subsidy could amount to nearly £47,000 a year. The expense is particularly significant given that international school fees in Hong Kong have risen sharply since the Covid pandemic. The English Schools Foundation (ESF), Hong Kong’s largest international school group, plans to raise tuition fees by an average of 4.1% for most of its primary and secondary schools in the next academic year, adding between HK$600 and HK$720 to monthly bills. The ESF has cited the need to invest in school facilities, technology, and teachers. Other institutions, such as Discovery College, have also proposed fee increases.
Notably, the school fee subsidy does not extend to staff at Hang Seng Bank, which HSBC fully acquired in January for £10 billion. Hang Seng has been delisted from the local stock exchange, and HSBC has reportedly been pushing it to address bad debts linked to Hong Kong’s property market. The acquisition is a central part of the bank’s strategy to double down on Asia, but the exclusion of Hang Seng employees from the perk has further highlighted the internal disparities at HSBC.
Wider cost-cutting overhaul under Elhedery
Georges Elhedery, who became CEO in 2024, has embarked on a major restructuring of HSBC, including significant cost reductions, exiting certain markets, and splitting the bank’s operations into distinct eastern and western divisions. In a recent interview with Bloomberg Television, Elhedery said he was “ruthless about killing complexity” in his drive to make the lender more simple and agile. The move briefly sparked rumours of a potential HSBC break-up, which were later quashed.
The bank has set a target to save $1.5 billion in annual costs by the end of 2026, with a $300 million reduction planned for 2025. This has already led to thousands of job cuts, a reduction in senior management roles, and plans to redeploy approximately $1.5 billion from non-strategic activities into areas of competitive advantage. HSBC reported a pre-tax profit of $29.9 billion for 2025, a 7% decline year-on-year, largely due to one-off charges. Excluding those items, profits increased. The bank has raised its return on tangible equity target to 17% or better through 2028, and is increasing its investment in Hong Kong and other high-growth markets to $1.8 billion in the coming years, focusing on technology, products, and staff training.
HSBC generates most of its profits in Hong Kong and China, and the city remains its most important market. The bank is one of three note-printing lenders in Hong Kong and the largest by assets. It was founded in 1865 by Thomas Sutherland, a Scotsman working in Hong Kong for a shipping business, to finance trade between Europe and Asia. An office in London opened the same year. In 2016, the bank’s board decided to keep its headquarters in London, citing the city’s status as a global financial centre and its access to skilled talent, while acknowledging Hong Kong’s pivotal role.
Beyond the school fee subsidy, HSBC offers employees a range of benefits including paid sick leave, paid holidays, life insurance, and laptop provision. The bank also emphasises employee well-being through comprehensive medical and mental health support, as well as financial health resources. Its “Employee Banking Solutions” provide exclusive packaged benefits to staff of leading organisations, including preferential rates and financial guidance. HSBC has been contacted for comment.
