New | Thin veil of correctness covering pay cuts at state banks
On the surface chiefs support move to slash top management salaries by up to 50 per cent though it could lead to exodus of mid-tier talent
When it comes to Beijing's directives to its banks, there is little dissension in the ranks, at least on the surface.
On news that state-controlled lenders would slash salaries starting this year - by up to 50 per cent for top management - chairmen at the banks have unequivocally stood by the political correctness of the cuts for people, including themselves, who are essentially appointed officials.
"Sometimes senior government leaders become senior leaders at banks," said Wang Hongzhang, the chairman of China Construction Bank, the country's second-largest commercial lender by assets, on delivering the bank's full-year results for last year.
"There shouldn't be a huge discrepancy in pay [between those two roles]."
Wang makes a good point: appointments to the top roles at the commercial banks are not made on a commercial basis. The vast majority are appointed by the Communist Party's organisation department, based on political achievements. Their tenure is often short and successful leaders sometimes hop into the most sought-after regulatory roles.
China Securities Regulatory Commission chairman Xiao Gang and his counterpart at the China Banking Regulatory Commission, Shang Fulin, both held top roles at two of China's biggest banks.
That is all well and good for those who count themselves among the party elite. Desperately needed talent outside that system might see the cuts as less correct for their wallets, or for productivity at the banks.