CCB says pay cuts for executives in line with global standard
Huang Yi says that any reduction in pay at state banks will be in line with international practice
China Construction Bank executives acknowledged yesterday that senior executives at mainland state banks could face pay cuts in line with recent government reforms but pushed back against reports that general staff salaries would be slashed.
"Remuneration packages at state-owned enterprises have been an area of concern for quite some time, especially for those at the very top, including myself. I also have to face a salary cut, right?" CCB executive vice-president Huang Yi said at a press conference in Hong Kong in response to questions on pay cuts reported by mainland media.
"We are talking about senior management only. Other staff members won't be affected."
On Friday, mainland media reported that China's second-biggest lender would enact a so-called 5321 plan, denoting a 50 per cent cut to executive pay, a 30 per cent cut for department heads and 20 per cent for section heads. General staff salaries would be reduced by 10 per cent.
In late August, mainland media reported that the central government passed a measure on reducing compensation for employees of state-owned firms.
The measure called for a 30 per cent reduction in the pay of a top executive or capping it at 600,000 yuan (HK$757,000).
Pay cuts for top executives would be in line with international standards, Huang said.
"In 2008, we had the financial crisis and many people criticised the senior management of financial institutions because they got too much money," he said at a conference to discuss the bank's interim results, which were released late on Friday. "The same adjustments have been implemented in the US and in Europe, so state-owned enterprises in China have to follow this natural trend."
But the bank's senior executives also sought to dispel rumours that any decisions regarding pay cuts had been made at CCB. "It is still just hearsay and we shouldn't make any comment on it," CCB president Zhang Jianguo said.
Zhang also defended the work of the bank's employees, saying that operations had been enhanced without large increases to the company's workforce.
"We have to ensure the stability of pay for all our employees," he said.
Competition for financial talent in the mainland is fierce. Broader reform to remuneration at state-owned banks could push some staff towards international financial institutions, bank employees said.
"Right now it looks like only top-level people will be affected so we are not that worried about it," a mid-level manager at one of the mainland's biggest banks said. "If [pay cuts] affected everyone, then you might see some loss of talent to foreign banks."
China Construction Bank's share price fell more than 1 per cent in Hong Kong, underperforming the Hang Seng Index.