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China curbs top bankers' bonuses
By Zhang Fengming |
March 10, 2010, Wednesday
|
Online Edition
Online Edition
CHINA today unveiled stricter rules to target fat-cat banking executives and avoid a Wall Street bonus-driven risk-taking culture that triggered the credit crunch.
Senior banking executives' performance-related bonuses should be not more than triple their basic salary, the China Banking Regulatory Commission said today in a new guideline.
At least 40 percent or more of an executive's bonus must be delayed in payment for a minimum of three years and could be withheld if their bank suffers losses due to their poor risk controlling, the top banking regulator said on its Website.
"We're not limiting bankers' pay but aim to put a brake on the bonus culture that drives bankers to cash in on unnecessary risks," the top banking watchdog said. "This guideline aims to instruct commercial banks to learn lessons from the financial crisis."
China's action follows outrage over banking bonuses in Wall Street and London as economies emerge from the trough in 2009.
In China, the banking industry has lower pay than western rivals.
"The question at the heart of the industry is different in China," said She Minhua, a Haitong Securities Co analyst. "The question in China is that bankers can always ride on high income because banks can rake in high profits because of their monopoly."
The big five Chinese banks are state owned.
Senior banking executives' performance-related bonuses should be not more than triple their basic salary, the China Banking Regulatory Commission said today in a new guideline.
At least 40 percent or more of an executive's bonus must be delayed in payment for a minimum of three years and could be withheld if their bank suffers losses due to their poor risk controlling, the top banking regulator said on its Website.
"We're not limiting bankers' pay but aim to put a brake on the bonus culture that drives bankers to cash in on unnecessary risks," the top banking watchdog said. "This guideline aims to instruct commercial banks to learn lessons from the financial crisis."
China's action follows outrage over banking bonuses in Wall Street and London as economies emerge from the trough in 2009.
In China, the banking industry has lower pay than western rivals.
"The question at the heart of the industry is different in China," said She Minhua, a Haitong Securities Co analyst. "The question in China is that bankers can always ride on high income because banks can rake in high profits because of their monopoly."
The big five Chinese banks are state owned.
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