SOME of China’s largest state-backed financial firms are asking employees in Hong Kong to return a portion of their pay, extending President Xi Jinping’s “common prosperity” campaign to the offshore business hub.
Some Hong Kong-based executives and even former employees at China Everbright Group and China Huarong International Holdings have been asked to pay back part of their past bonus in recent months, according to people familiar with the matter, who asked not to be identified discussing private information.
The clawback amounts to less than 10 per cent of bonuses at China Everbright, the main Hong Kong-listed arm of Everbright Group, one of the people said, after the central government inspected its local operations. It is unclear how many employees will be impacted by the policy and how far it will extend below the executive ranks.
The development marks an escalation of austerity efforts at state-owned financial conglomerates, which have so far mainly limited pay for mainland-based employees.
Chinese bankers have come under increasing pressure in recent years as the Communist Party tightened its grip on the US$66 trillion financial sector, where high pay has also drawn public criticism during an economic slowdown.
Xi’s signature drive has sent shock-waves through China’s financial industry since it was rolled out in 2021. Firms across China have slashed salaries and asked for staff to return part of past paychecks that have now been deemed too high.
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It is unclear how many financial entities will be subject to the latest guidance. But the move may add to questions about how long Hong Kong can maintain its status as a financial centre, which was undermined by pandemic-era travel restrictions and political upheaval. It could also delay a recovery in the city’s sluggish retail sector and property market.
China Everbright and China Citic Financial Asset Management, the parent firm of Huarong International, did not immediately respond to Bloomberg requests for comment.
China Merchants Group is also among state entities that have asked some senior staff in mainland China to forgo deferred bonuses and in some cases return pay from previous years to comply with a pre-tax salary cap of 2.9 million yuan (S$536,502).
Several Chinese mutual fund managers proposed capping salaries at about three million yuan. Some brokers and banks have also announced pay cuts and dialed back travel perks.
Vilified by Beijing as “hedonists” over their lavish lifestyles, top-earning finance workers have been among the hardest hit by Xi’s push for a more equal distribution of wealth. The moves mark a drastic shift from the era where companies doled out big pay checks to lure top talent.
The drive to lower pay comes on top of an anti-graft push that has ensnared more than 100 top bankers and regulators for last year alone. Authorities are trying to stabilise the world’s second largest economy and prevent systemic financial risks. BLOOMBERG
