China International Capital Corp (CICC) is set to reduce bonuses for dealmakers by as much as 40% in response to the Chinese government's push to narrow income disparity, according to three sources with direct knowledge of the situation. This significant reduction marks one of the financial sector's most substantial cuts in the past two years.
Some senior dealmakers at China's third-largest brokerage by market value may experience an even more considerable reduction in their 2022 bonuses, with one source estimating a two-thirds cut. Another source said the bonuses would be paid out in the coming days.
In recent years, wages at leading Chinese investment banks have been on a downward trend due to COVID-19 containment measures slowing deal-making activities in the world's second-largest economy. This trend has accelerated as employers adjust pay and benefits in line with the government's "common prosperity" rhetoric.
CICC's bonus cuts come as authorities heighten their campaign against displays of extravagance in the $57 trillion financial sector. In February, the Central Commission for Discipline Inspection (CCDI) vowed to eliminate ideas of a "financial elite" and "parity with the West," along with hedonism and excessive pursuit of "money only" and "high-end taste."
These reductions follow a 10.5% decline in company-wide remuneration at CICC, where the average salary fell 30% to 820,000 yuan ($1.73 billion). For top executives and board members, the total payout shrank by 56%. In comparison, Wall Street bonuses fell 26% last year, averaging $176,700, according to a report by New York State Comptroller Thomas DiNapoli.
CICC had sought approval for less severe pay cuts this year from top shareholder China Investment Corp (CIC) and other supervisory bodies but was informed its proposal was not aggressive enough, two sources said. The sovereign wealth fund CIC has not commented on the matter.
Apart from remuneration cuts, some investment banks have requested employees to avoid showcasing wealth, such as posting photographs of costly meals or overseas trips on social media. In February, CICC issued guidelines asking staff to refrain from posting content that may reveal high income or a luxurious lifestyle, according to two individuals familiar with the matter.
