December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Leading investment banks in China move to reduce remuneration budget for workers

Securities Illustration: VCG

Securities Illustration: VCG

A number of leading investment banks in China have reportedly reduced remuneration budgets in recent months, leading to extensive discussions among netizens on social media platforms. Experts said on Thursday that the payment reduction remains within a reasonable range.

CITIC Securities, one of the country’s leading investment banks, has recently implemented remuneration reductions for employees below the managing director level in its investment banking division. Some staff members experienced base salary reduction ranging from 6,000 to 10,000 yuan ($850-$1,430), domestic news site reported on Wednesday.

In fact, the financial institutions have started lowering payment levels since last year, including China International Capital Co, Huatai Securities, China Merchants Securities and others, according to media reports.

An industry insider who preferred not to be identified told the Global Times on Thursday that it is true that many investment banks have started adjusting their salary structures of their employees. The insider works in the investment banking division of a financial company.

“We have not seen any direct salary reductions, but the payment schedule for annual bonuses has been delayed by three years,” he explained. “This means that we will only receive the annual bonus for the current year after three years.”

White-collar workers in investment banking divisions are bearing the brunt of the salary reduction. Some managing directors and executive general managers seen their income reduced by 30-40 percent, the report said.

Some financial institutions have also started to adjust the salary structures for research teams, reports said. “For some analysts, if their assessment falls short of the standards in the future, they may face the risk of being laid off.”

There are several reasons for the salary cuts, including the downturn in industry performance during recent years, the insider noted.

The financial industry is traditionally known for its generous compensation schemes for staff. The income gaps between the financial industry and other sectors, between leading companies and small companies within the industry have grown relatively wider than a reasonable level, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday. 

Regulatory authorities have also called for the scientific design of compensation systems and the establishment of incentive mechanisms that balance both short-term and long-term considerations, experts noted. 

The reported reduction remains within a reasonable range, Xi said. 

One netizen commented on Weibo that even a reduction of 6,000-10,000 yuan represents more than many others could earn per month. As for the senior executives, they remain among the wealthiest groups even with a 30-40 percent salary reduction.

Global Times