HONG Kong's Hang Seng Bank will raise salaries by a bigger margin this year amid inflationary pressures and competition.

The bank, Hong Kong's second-largest, will increase pay between two percent and 12 percent with effect from this month, Bloomberg News said.

In 2007, it raised salaries between 1.5 percent and 8.75 percent.

Hang Seng Bank decided on the increment "after examining various factors, such as Hong Kong's economy, development of our business and competition for banking staff," spokeswoman Cecilia Ko said yesterday as employees were notified about the pay rise in an internal memo.

Banks with operations in Hong Kong, including HSBC Holdings which has the largest network in the city, are raising salaries to retain staff after the unemployment rate fell to a nine-year low.

HSBC Executive Director Peter Wong said last month the bank will lift pay by a margin higher than the city's inflation rate.

Rising costs of food imports from Chinese mainland and real-estate prices pushed the city's inflation rate to a nine-year high of 3.4 percent in November. The jobless rate fell to 3.4 percent the same month as the city benefited from being a financial and transport hub for Chinese mainland.

Hang Seng Bank will pay bonuses ranging from three months' salary to 10 months for the best performing employees, the Hong Kong Economic Times reported yesterday. Ko declined to verify the figures, adding the bank will announce bonuses after issuing its annual results on March 3.

The bank may report net income reached HK$14.8 billion (US$1.9 billion) last year, according to the median of 10 analyst estimates compiled by Bloomberg. That would be 23 percent higher than 2006's HK$12 billion.

BOC Hong Kong Holdings Ltd may pay bonuses equivalent to 12 months of salary, the Economic Times reported. The bank is expected to announce its figures in March.