(March 17): Some senior bankers at China’s state-backed financial firms are bracing for bonus cuts of at least 30% as Beijing intensifies a sweeping remuneration reform across its US$69 trillion ($88.2 trillion) financial sector.
Senior managers, including department heads across business lines at two major state-owned banks, saw their 2025 bonuses slashed by 30% to 50%, according to people familiar with the matter who asked not to be named discussing private information. Division chiefs at a mid-sized national lender also saw their variable pay drop by roughly 40% last year, one of the people said.
The current wave of cuts follows a years-long push by President Xi Jinping to promote “common prosperity” and crack down on what officials have termed the “hedonistic” lifestyles of elite bankers.
Authorities are particularly focused on fixing an inverted pay structure. Historically, mid-level managers at Chinese financial firms have frequently out-earned top executives, whose salaries are strictly capped due to their status as Communist Party officials.
The Ministry of Finance instructed key state-backed institutions late last year to submit formal plans to overhaul their compensation models. While many institutions are still awaiting final approval from the MOF, some have already moved to cut pay retroactively. Slashing bonuses is the most effective lever, as variable pay typically accounts for 50% to 70% of a manager’s total compensation package.
The ministry didn’t immediately respond to a request seeking comment.
See also: China’s aluminium industry draws raw material diverted by war
By contrast, global banks with a large presence in Asia such as HSBC Holdings Plc and Standard Chartered Plc boosted their bonus pools by about 10%.
The belt-tightening has gone beyond banking. One major state-owned insurer cut 2024 bonuses for mid-level managers by at least 30% late last year, according to a person familiar with the decision.
Chinese banks reported a combined profit of 2.38 trillion yuan last year, up 2.3% from 2024, even as margins narrowed and non-performing loans hovered near a record high.
See also: China reins in fertiliser exports as war pushes up global prices
The bonus cuts are the latest sign of Xi’s tightening grip on a sector where high compensation has been questioned amid a stuttering economy. Beyond pay, the government has launched an aggressive anti-graft campaign, resulting in a series of high-profile probes and severe judicial penalties, including life and death sentences.
Despite the regulatory chill, pockets of the industry are beginning to show signs of a tentative recovery. A recent upswing in dealmaking has prompted several Chinese brokerage houses to start to rebuild, with investment banking divisions adding dozens of junior and mid-level staff.
Some firms have also moved to restore base pay toward pre-crackdown levels to remain competitive for talent. Still, bonus pools remain under strict regulatory scrutiny, people familiar with the matter said earlier.
Uploaded by Magessan Varatharaja
