Selena Lee and Julie Zhu
HONG KONG/SHANGHAI (Reuters) – China International Capital Corp (CICC) is cutting base pay for onshore investment bankers by as much as 25%, three sources said, in a bid to cut costs amid volatile markets and Beijing’s austerity policies.
Some of the affected people handling the deals were notified Friday of the cuts, said people with knowledge of the pay cuts but who declined to be named because they were not authorized to speak to the media.
The cuts will take effect immediately, two sources said. The CICC did not immediately respond to a Reuters request for comment on Sunday.
The pay cuts will affect more than 2,000 bankers and come after one of China’s largest investment banks by headcount cut bankers’ bonuses by nearly 40% last year, Reuters reported last April.
The rare move by a leading investment bank to cut base pay by as much as a quarter underscores the challenges facing Chinese financial firms amid a slowing economy and sluggish IPOs in major listing destinations China and Hong Kong.
Investment bankers are typically subject to variable bonuses based on performance, but drastic base pay cuts are less common. Rival CITIC Securities cut salaries at its investment banking unit by nearly 15% last year, Reuters reported in June, citing sources.
Money raised in IPOs by Chinese companies on both onshore and offshore exchanges fell 80% to $2.9 billion in the first quarter from a year earlier, according to LSEG.
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Chinese financial firms have also moved toward austerity policies in the past couple of years – cutting wages and bonuses and asking employees not to wear expensive clothes and watches to work – as Beijing tries to close the wealth gap.
Moreover, as Beijing moved forward in its fight for “shared prosperity”, the country’s top anti-graft watchdog last year vowed to root out the ideas of Western-style “financial elites” and correct the hedonism of excessive pursuit of “high taste”.
Financial professionals are among the highest paid workers in communist China, and their wealth and lavish lifestyles are often criticized by the public on social media as the economy slows.
The bank is also mulling job cuts at its offshore investment banking unit in Hong Kong, one of the three sources said. It is unclear how many bankers are permanently based offshore.
The bank has not yet announced bonuses for 2023, according to two of the three sources, who said the firm’s bankers last year began receiving messages about bonuses in early April.
According to the bank’s annual report published in March.
The Beijing-headquartered brokerage’s shareholder earnings fell 19% in 2023 from 2022 to 6.2 billion yuan, after falling 29% in 2022 from a record high of 10.8 billion yuan in 2021, the report said. .
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($1 = 7.2464 yuan)