CICC ‘cuts pay 40%’ as Xi campaign takes hold
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 longawaited bonuses.
China International Capital Corp this week told some senior bankers that their compensation for 2022 will be cut by more than 40%, according to people familiar with the matter who asked not to be identified discussing internal information.
CICC, whose pay to bankers has historically been on par with global firms such as Goldman Sachs Group Inc and UBS Group AG, is slashing bonuses after a tough year that saw profit drop by 30%. The cuts correlate with Xi’s “common prosperity” campaign that has sought to corral pay for the elite while regulators have lashed out at the “hedonistic” lifestyle of bankers.
Executives at CICC deliberated for months over how to set bonuses that would comply with one of Xi’s signature campaigns, one of the people said. They sought advice from government shareholders on what constitutes excessive pay and what would be considered acceptable, but didn’t receive any specific guidance. The ambiguity has contributed to the delays as brokerages are hesitant to be the first one out, according to the person.
Rivals, including Haitong Securities Co and Citic Securities Co, have yet to give notice on their payouts months later than usual, the people said.
Shanghai-based Haitong Securities has told its senior managers in Hong Kong that they’re committed to paying bonuses after more than two months’ delay, without providing details, another person said. China’s biggest investment banks typically notify employees of their bonus entitlement shortly following Chinese Lunar New Year.
A Beijing-based spokeswoman at CICC declined to comment. Representatives of Haitong, Citic and the Ministry of Finance, which is in charge of compensation at stateowned financial institutions, didn’t immediately respond to requests for comment.
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 don’t fall in line with the new agenda on pay, one of the people 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 Corp, saw their total compensation drop by 40% to 50%, people familiar with the matter said earlier.
Business has been hard hit in China by a regulatory crackdown and the nation’s now abandoned pursuit of Covid-Zero. China’s 140 brokerages posted a combined 26% decline in profits last year, according to official data.