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Guotai Junan slashes salaries up to 22pc amid poor market conditions

Guotai Junan Securities, one of the mainland's biggest brokerages, is slashing salaries as it battles to cut costs in a slumping market.

Two sources said the Hong Kong investment banking arm of the brokerage, Guotai Junan (Hong Kong), had reduced basic pay by as much as 22 per cent for some staff.

Mainland employees had their salaries trimmed by an average 20 per cent.

The pay cut has only affected those who joined the Hong Kong unit this year and last year, according to one source.

The biggest cuts were mainly felt by staff in the research department, while employees in the brokerage and investment banking operations had their salaries reduced at the lower end of the scale.

The reductions were effective from last month, the source said.

Chief executive Yim Fung could not be contacted for comment.

'It's better to say this is a salary adjustment instead of a pay cut,' said a source.

'Some staff enjoyed an inflated bonus-package when they joined the firm in 2007 and 2008 because of the booming market.'

The global economic crisis, fewer initial public offerings and thinner trading volumes have pushed many investment banks to introduce hiring freezes or even redundancies.

'Headcounts have been frozen since late last year and budgets have been cut to lower overhead expenses,' said a senior executive at a mainland investment bank.

'Cutting entertainment fees, travelling packages or even eliminating the housing allowance are ways to cut expenses. We have to do that otherwise we couldn't survive amid the current tough environment.'

A source at the mainland unit of Guotai Junan Securities said the salary cuts started two months ago and employees at the brokerage and research units had been the most affected.

At present, base salaries remained the same but the monthly bonus had been cut, sources said.

The Hong Kong market has tumbled 39.58 per cent since the beginning of the year while the mainland market has until yesterday fallen 58.99 per cent.

Pay blues

Staff who joined in the past two years the most affected

Mainland staff of Guotai Junan will see their salaries cut an average: 20%

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