HSBC Holdings Plc has announced plans to phase out fixed-pay allowances (FPAs) for staff starting in January 2028, marking a significant shift toward a Wall Street-style remuneration framework.

According to an internal memo, the upcoming transition is enabled by regulatory changes in the United Kingdom that removed the historical 2-to-1 cap on variable-to-fixed pay.

Originally implemented to comply with post-crisis EU restrictions, fixed-pay allowances were used to supplement base salaries.

Under the new model, HSBC will eliminate these allowances while keeping base salaries untouched, allowing a greater proportion of total compensation to be paid through performance-linked bonuses.

Bank executives noted that the strategic pivot aims to strengthen competitiveness, align payouts with individual performance, and enhance the firm's ability to attract and retain top talent.

HSBC said base salaries would not be reduced and its approach to total compensation would not change.

Staff affected by the move may have ‌more of their compensation paid through variable pay, such as bonuses.

"As a global bank, adapting our approach in this way strengthens our ability to pay for performance, better differentiate, attract the best talent, and recognize those who deliver the best outcomes for our customers, clients and stakeholders," an HSBC spokesperson said.

HSBC has been reshaping its business under CEO Georges Elhedery, who took the role in September 2024, merging some businesses and splitting its structure into four main units.