Regulator restricts pay for bank top executives

15:01, March 11, 2010      

Email | Print | Subscribe | Comments | Forum 

In a fresh effort to curb financial risk-taking, China's regulators are tightening controls on pay for its top bankers.

The China Banking Regulatory Commission announced in a statement Wednesday that lenders shall withhold a minimum 40 percent of bonuses for top executives for up to 3 years, and can recover bonus payments if their poor performance leads to losses later.

"We should learn advanced ideas from other countries around the world after the financial crisis to reform the remuneration system for financial institutions," said the statement.

A few European countries, including Britain and France, have linked pay for their top bankers to long-term performance after huge criticism that compensation practices encouraged outsized risk-taking and helped to spark the worst global financial crisis in 2008.

China's banks avoided the mortgage-related turmoil that battered American and Western banks, but regulators are trying to improve risk management as they liberalize the state-owned industry in hopes of making it more efficient and productive, analysts say.

The bonus package for top bankers will be capped at three times an executive's base salary, China's banking regulator said.

China's top bankers are paid modestly by Western standards but receive many times the salary of the average staff, which has fueled public anger.

The chairman of China's biggest bank, Industrial & Commercial Bank of China (ICBC) was paid 1.6 million yuan ($235,000) in 2008, while Citigroup CEO Vikram Pandit received $38 million that year, according to an report by the Associated Press.

Last April, China's central government ordered top Chinese bank and insurance executives to take a pay cut to promote economic fairness, which was welcomed by the ordinary workers.

People's Daily Online

  • Do you have anything to say?


Special Coverage
Major headlines
Editor's Pick
  • Elie Saab Fall/Winter 2010/11 women's ready-to-wear fashion show
  • Snapshots from Int'l Tourism Bourse in Berlin
  • High school students in Taiwan attend coming-of-age rite
  • Envy? Baby otter dossing down on mom's stomach
  • 1000th day of Israeli blockade on Gaza Strip marked
  • 20th anniversary of Lithuania's declaration of independence
Most Popular
Hot Forum Dicussion