BEIJING - After months of delays as they deliberated on how to navigate President Xi Jinping’s push for “common prosperity”, China’s biggest investment banks are now starting to pay out long-awaited bonuses.
China International Capital Corp (CICC) this week told some senior bankers that their compensation for 2022 will be cut by more than 40 per cent, according to people familiar with the matter.
CICC, whose pay for bankers has historically been on a par with that of global firms such as Goldman Sachs and UBS, is slashing bonuses after a tough year that saw profit drop by 30 per cent.
The cuts also correlate with Mr Xi’s “common prosperity” campaign that has sought to corral pay for the elite, with regulators lashing out at the “hedonistic” lifestyle of bankers.
Executives at CICC deliberated for months over how to set bonuses that would comply with one of Mr Xi’s signature campaigns, one of the sources said.
They sought advice from government shareholders on what constitutes excessive pay and what would be considered acceptable, but did not receive any specific guidance. The ambiguity has contributed to the delays as brokerages are hesitant to be the first one out, according to the source.
Rivals including Haitong Securities and Citic Securities have yet to give notice on their payouts, the sources said.
China’s biggest investment banks typically notify employees of their bonus entitlements shortly after Chinese New Year.
In many cases, the highest-ranking executives at the state-owned brokerages are Communist Party members who could receive punishment or even a demotion if they do not fall in line with the new agenda on pay, one of the sources said.
Top bankers in Asia at major Wall Street firms have also seen deep cuts.
On average, managing directors at banks including Goldman Sachs, Morgan Stanley and Bank of America saw their total compensation drop by 40 per cent to 50 per cent, people familiar with the matter said earlier.
Business has been hit hard in China by a regulatory crackdown and the nation’s now-abandoned pursuit of zero-Covid. China’s 140 brokerages posted a combined 26 per cent decline in profits in 2022, according to official data. BLOOMBERG
