According to Reuters, Chinese bankers and high-paid jobs in Chinese state-owned enterprises began to cut their salaries and compensations in response to the regime’s “common prosperity” drive.
Multiple sources told the news outlet that Chinese state-owned investment banks, China International Capital Corp and Citic Securities, reportedly cut salaries and delayed bonuses for the year. In some cases, the cut is as much as 60% of the compensation.
Other state-owned firms, such as China Merchants Securities, have cut travel and entertainment allowances since the start of the year.
Xia Chun, a chief economist at wealth manager Hong Kong-based Yintech Investment Holdings, told Reuters that capping on salary in the financial industry is a part of the common prosperity drive.
Reuters reported that 13 of the 30 highest-paid investment banks lowered the pay packages of the board and senior management members in 2021. And the number will rise this year.
An industry insider said that a senior investment bank’s annual income in China could be between $445,000 to nearly $1.5 million, not including stock incentives.
Chinese agencies reportedly have summoned global financial giants, including Credit Suisse, Goldman Sachs, and UBS, warning these foreign banks not to compensate executives in China too much.
Last month, Bloomberg reported that Chinese regulators had warned foreign investment banks at meetings in Shanghai and Beijing this year not to be “overly generous” in paying bank executives. The regulators also ask these banks to lower the amount of “cash” they pay these executives.
As reported by Financial Times, the Asset Management Association of China required the investment banks to defer at least 40% of bonus payments to their senior staff for three or more years.