The Ministry of Finance has tightened its grip on executive pay at state-owned financial institutions, as most of them recorded solid profit growth last year but a decline in remuneration for top management, sources and state media said. Annual results released by the country's major listed lenders and insurers showed an average drop of more than 10 per cent in pay packages for top executives, according to China Business News. A Shanghai banking source said he was aware of a notice by the finance ministry regarding the matter, but did not give further details. State-owned financial institutions, supervised by the finance ministry, have previously been given a relatively freer rein on remuneration than industrial firms that are under the control of the State-owned Assets Supervision and Administration Commission. But as the global economic turmoil deepened and discontent over financial institutions rose, Beijing has also become more mindful of the pay scale for the country's top bankers and financial chiefs. The authorities had reportedly proposed a pay ceiling for senior financial executives but there has been no confirmation on this. 'The move was justifiable, considering the international and domestic political climate,' said Yuang Gangming, an economist with the government-backed Chinese Academy of Social Sciences. 'Though the compensations for Chinese state-backed financial chiefs were not yet close to the international levels, it is worth pointing out that the state enjoys de facto domestic monopoly and some top executives got their jobs not because of their competence but political status.' The United States has required financial firms that receive future state aid to cap annual pay for top executives at US$500,000. Despite a 35.2 per cent rise in net profit, the chairman of the Industrial and Commercial Bank of China, the country's biggest lender, saw his annual pay drop about 10 per cent from 1.79 million yuan (HK$2.03 million) in 2007 to 1.61 million in 2008. Earnings growth and pay cuts for top managers was also seen at state-owned lenders Bank of Communications and China Construction Bank Corp, which both have international branch networks.