By Selena Li and Julie Zhu
HONG KONG/SHANGHAI (Reuters) – China International Capital Corp (CICC) is cutting the base salary of onshore investment bankers by up to 25%, three sources said, in a major bid to cut costs amid volatile markets and Beijing’s austerity measures.
Some of the affected dealmakers were informed of the cuts on Friday, said the sources, who have knowledge of the pay cuts but declined to be named because they are not authorized to speak to the media.
The cuts will take effect immediately, two of the sources said. CICC did not immediately respond to Reuters’ request for comment on Sunday.
The pay cuts affect more than 2,000 bankers and come after one of China’s largest investment banks by headcount cut bonuses for bankers by up to 40% last year, Reuters reported in April last year.
The top investment bank’s rare move to cut base salaries by up to a quarter underscores the challenges facing Chinese financial firms amid a slowing economy and sluggish initial public offerings in major stock market destinations in China and Hong Kong.
Investment bankers are typically subject to volatile, performance-based bonuses, but drastic cuts in base pay are less common. Last year, rival CITIC Securities cut salaries across its investment banking division by up to 15%, Reuters reported in June, citing sources.
Funds raised by Chinese companies through initial public offerings on onshore and offshore exchanges fell 80% to $2.9 billion in the first quarter compared to a year ago, according to LSEG data.
Chinese financial companies have also taken austerity measures in recent years, cutting salaries and bonuses and asking employees not to wear expensive clothes and watches to work, as Beijing pushes to close the wealth gap.
As Beijing presses ahead with its pursuit of “common prosperity,” China’s top anti-corruption agency vowed last year to eliminate the ideas of a Western-style “financial elite” and correct the hedonism of excessive pursuit of “high-end taste.”
Finance professionals are among the highest paid workers in communist China, and their wealth and flashy lifestyles have often drawn criticism from the public on social media as the economy slowed.
The bank is also considering job cuts at its offshore investment banking unit in Hong Kong, according to one of the three sources. It is unclear how many bankers are permanently based abroad.
According to two of the three sources, the bank has not yet announced any bonuses for 2023. The company’s bankers said that last year, the company’s bankers received bonus announcements starting in early April.
Funds raised through mainland CICC IPOs fell 31% to 359 billion yuan ($49.5 billion) in 2023 compared to 2022, while Hong Kong IPO proceeds fell 56% to 5, $9 billion fell, according to data from the bank’s annual report published in March.
Profit attributable to shareholders of the Beijing-based brokerage fell 19% to 6.2 billion yuan in 2023, after falling 29% in 2022 from an all-time high of 10.8 billion in 2021, the report showed .
($1 = 7.2464 yuan)
(Reporting by Selena Li, Julie Zhu and Summer Zhen in Hong Kong; Additional reporting by Shanghai bureau; Editing by Sumeet Chatterjee and Tom Hogue)