Agricultural Bank of China chief backs pay cuts for executives

PUBLISHED : Wednesday, 27 August, 2014, 12:36pm
UPDATED : Wednesday, 27 August, 2014, 1:24pm

The Agricultural Bank of China’s president became the first among the mainland’s big five state banks to openly advocate a salary-reduction plan for top executives in state-owned enterprises amid a reform push by the government.

ABC president Zhang Yun, quoted by The Beijing News, pledged his support for the scheme, saying senior executives at state banks were among the targets of the plan deliberated by the top leadership last week.

The bank “will firmly support and strictly implement the decision”, Zhang said at the bank’s first half-year performance press conference on Tuesday.

According to the last year annual reports of the five state banks, most of their presidents, deputy presidents and board chairmen made around 1 million yuan (HK$1.26 million) a year. Only the president of the Bank of Communications made less than that, earning 420,000 yuan last year.

Zhang Yun’s own annual salary, before tax, was about 1.06 million yuan last year. The bank’s chairman, Jiang Chaoliang, earned 1.13 million yuan, and its two vice-presidents notched 930,000 yuan each.

The South China Morning Post last week broke the news about the salary reform scheme, including pay cuts of up to 50 per cent and new job descriptions, after President Xi Jinping and his reform team discussed the proposal last week.

Read More: Bosses at China's state-owned enterprises face pay cuts of up to 50pc

Mainland media later reported that the cuts might be even higher and that a cap of 600,000 yuan would be imposed for executives’ annual salaries.

The Ministry of Human Resources and Social Security, which spearheaded the plan, said on its website that it was amending the document in accordance with the top leadership’s opinion and would apply for approval before it takes effect.

According to existing regulations, the performance-related pay of top executives at commercial banks should be kept lower than triple their basic pay, and payment of at least 40 per cent of this part should be delayed by more than three years.

Agricultural Bank of China, the mainland’s fourth-largest lender by assets, said on Wednesday that its net profit grew 12.65 per cent in the first half of the year to 104 billion yuan – the strongest growth among its rivals.

Bank of China, meanwhile, saw its first half-year net profit rise 11.15 per cent year-on-year to 89.72 billion yuan, while Bank of Communications posted slow growth of 5.6 per cent.