China’s most vibrant banks reported the largest salary cuts among financial institutions last year, while 10 state-controlled lenders also demanded that employees return bonuses as the government tries to reshape the financial sector. The large pay cuts came as the 12 national joint-stock banks are increasingly struggling with debts in the property market and at local government financing vehicles (LGFVs). Bohai Bank, based in the debt-ridden northern municipality of Tianjin, reported the largest pay cut of 11.8% to an average annual salary of CNY438,000 per employee, followed by an 8.5% cut at Ping An Bank and 6% cuts from China Merchants Bank (CMB) and China Citic Bank. Industrial Bank registered a cut of 3.3%, while China Everbright Bank reported a cut of 3%. The data was retrieved from HR expenditures included in annual financial reports. The figures also include welfare and other items, but it is widely used in China as a proxy for salary trends.
Meanwhile, 10 financial institutions also revealed they demanded employees return performance-based bonuses worth a combined CNY99.88 million in 2023, compared to only three in 2022. China Merchants Bank (CMB) ordered 4,415 employees to return a total of CNY43.3 million. Bank of China (BOC) made similar requests to 2,059 employees, while 499 employees at Bohai Bank were also asked to return bonuses, according to bank filings. “Almost all employees in the industry have experienced salary cuts in the past few years. Now, the ratio of actual wages to payable wages is around 60%.” said a Guangzhou-based banker, who asked not to be identified due to the sensitivity of the issue.
“For example, an ordinary employee who has worked at an ICBC branch for 20 years gets about CNY200,000 a year, which is far less than before the Covid-19 pandemic. “Even so, the competition is still fierce. In the asset custody department where I work, the new colleagues all graduated from world-renowned universities, and their income is about CNY6,000 after tax.” ICBC, China’s largest bank in terms of assets, and fellow big-six member China Construction Bank (CCB) reported a 2% fall in human capital expenditure last year. Meanwhile, managers at several banks, including China Merchants Bank, Citic Bank, China Zheshang Bank, and China Minsheng Bank, have seen maximum pay cuts of over 60%, said STCN, a news portal under the state-owned Securities Times newspaper. China’s banking regulator initiated a mechanism of pay deferral and clawback to deter and monitor senior executives and employees in positions of responsibility since 2021, which included staff who had resigned or retired. Banks accounted for around 90% of China’s CNY461 trillion financial industry last year, with the vast majority controlled by governments at different levels, the South China Morning Post reports.
