Why are all these juniors leaving HSBC's IBD business?

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If HSBC's IBD business were a bucket, it might not have much water around the bottom. It's come to our attention that plenty of HSBC's investment banking juniors have been leaving, often for large US investment banks.

In the past two months, HSBC has lost: Rohan Manaktala, Sharvil Kirtikar and Teemu Ruuska (all analysts) to BAML, Bhavneet Alg (an associate) to Morgan Stanley, Alina Porter (an analyst) to Morgan Stanley and Marc Murray (an analyst) to Evercore.

The departures might have something to do with the fact that HSBC is a smaller player in M&A than big banks like BAML and Morgan Stanley. In the first six months of 2015, HSBC ranked 13th for announced M&A according to Dealogic. Morgan Stanley ranked 1st and BAML fourth. Evercore, however, ranked outside the top 20.

The exits could also have something to do with HSBC's alleged parsimony when it comes to compensation. The bank is said to pay at the bottom of the range in London, although it became the last bank to hike junior salaries back in May.

HSBC was unable to immediately to comment on the departures, but recruiters say they're symptomatic of healthy M&A revenues. At Goldman Sachs, for example, M&A revenues were up 62% year-on-year in the second quarter. As revenues rise, the big players need more staff.  "It's quite unusual that people move from one top tier bank to another," says Richard Hoar, director at recruitment firm Goodman Masson.

The head of another recruitment firm, which has been working for HSBC, says the bank has certainly lost people in M&A but has been adding them as fast as they leave. "There's often a churn at HSBC because it's not seen as a real investment bank, but if you want to be a real old-fashioned international banker, there's nowhere better to do it. We've also placed people there specifically because they want to work abroad and rotate around the divisions."

Last week, Roy Smith and Brad Hintz at the NYU Stern School of Business, ranked HSBC as one of the top six banks globally for strategy. Bank of America Merrill Lynch failed to make the grade. Maybe HSBC's juniors should think more carefully before they quit?


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