Chinese State Bankers Face Bonus Cuts Of At Least 30%

Senior bankers at China’s state-backed financial institutions are preparing for bonus cuts of at least 30% as Beijing presses ahead with sweeping pay reforms across its $69 trillion financial sector, according to Bloomberg.

At two major state-owned banks, senior managers — including department heads — saw their 2025 bonuses reduced by 30% to 50%, according to people familiar with the matter. At a mid-sized national lender, division chiefs experienced roughly a 40% drop in variable pay last year.

The cuts are part of a broader campaign by Xi Jinping to promote “common prosperity” and curb what officials describe as the extravagant lifestyles of top bankers.

Regulators are also trying to address a pay imbalance in the industry. In many Chinese financial firms, mid-level managers have historically earned more than top executives, whose compensation is capped due to their status as Communist Party officials.

Bloomberg writes that late last year, the Ministry of Finance asked major state-backed institutions to submit plans to overhaul compensation structures. While many firms are still waiting for approval, some have already implemented retroactive pay cuts. Bonuses are the main target because variable pay typically makes up 50% to 70% of managers’ total compensation.

Meanwhile, international banks with a large presence in Asia, such as HSBC Holdings and Standard Chartered, increased their bonus pools by about 10%.

The belt-tightening extends beyond banks. A major state-owned insurer also reduced 2024 bonuses for mid-level managers by at least 30%, according to a person familiar with the decision.

Chinese banks posted combined profits of 2.38 trillion yuan ($346 billion) last year, up 2.3%, despite shrinking margins and non-performing loans remaining near record highs.

The bonus cuts reflect tighter government control over a sector once known for generous pay. Alongside compensation reforms, authorities have stepped up anti-corruption efforts, leading to several high-profile investigations and harsh penalties.

Even so, parts of the industry are beginning to stabilize. A recent rise in dealmaking has prompted some Chinese brokerage firms to rebuild investment banking teams by hiring dozens of junior and mid-level staff. Some firms have also moved to raise base salaries closer to pre-crackdown levels to stay competitive for talent, though bonuses remain closely monitored by regulators.