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China Will Cut Bankers' 'Unreasonably High' Pay

What’s low by Western standards is too rich for the government
China Will Cut Bankers' 'Unreasonably High' Pay
Photograph by Jerome Favre/Bloomberg

Jiang Jianqing, chairman of Industrial & Commercial Bank of China, the world’s biggest bank, earned 2 million yuan last year in salary, bonus, and benefits. That’s equivalent to about $326,000, or 1.6 percent of the $20 million in total compensation received by Jamie Dimon, chairman and chief executive officer of JPMorgan Chase, the largest U.S. lender. Even though ICBC made twice as much money as JPMorgan last year, Jiang is poised for a pay cut.

President Xi Jinping’s government said in August that it will reduce salaries for executives at state-owned companies because “unreasonably high” incomes have become a source of public discontent. For the biggest banks, the risk is that they will bleed talent just when they need skilled managers to grapple with interest rate deregulation, an explosion in shadow banking, and rising levels of soured credit. An exodus of key staff could create “a big mess,” says Victor Shih, an associate professor at the University of California at San Diego who studies China’s politics and finance. “The big four state banks are really large entities that depend on hundreds, if not thousands, of highly skilled bankers to operate.” ICBC declined to comment on the outlook for pay and staff retention.