Exclusive-China Minsheng Bank has cut salaries of Beijing employees by up to 50% in austerity drive By Reuters

BEIJING (Reuters) – China Minsheng Bank has cut wages by up to 50 percent for employees at its Beijing branch, two people with direct knowledge of the matter said, in the biggest such move by a major commercial bank, according to with the country’s austerity efforts. .

The bank also stopped paying for some labor-related expenses and other benefits at its Beijing branch, the bank’s largest with more than 4,000 employees, as part of wider pay cuts, one of the sources said.

The measures, which were not previously reported, have been broadly implemented at the Beijing branch, the source said. It was not immediately clear whether Minsheng Bank would implement these measures at its other branches.

The pay cut of up to 50% is the largest such reduction at a major Chinese commercial bank in recent years.

Both sources declined to be named because the information was not public.

Minsheng Bank and China’s banking regulator, the National Financial Regulatory Administration (NFRA), did not immediately respond to Reuters’ request for comment.

“COMMON PROSPERITY”

The wage cut fits with China’s “shared prosperity” drive, which was launched in 2021 to tackle social and income inequality as growth slowed in the world’s second-largest economy.

Financial firms in China, both state-owned and private, have implemented measures including cutting salaries and bonuses and requiring staff not to wear expensive clothes and watches to work.

China Construction Bank (OTC:) Corp (CCB), the nation’s third-largest commercial bank by assets, has asked employees at its headquarters to cut wages by at least 10 percent, Reuters reported in July.

China Merchants Fund Management, a top 10 fund manager, has asked senior executives to return pay received over the past five years, which exceeds a new cap, Reuters reported earlier this month.

The pay cuts at Minsheng Bank also reflect profitability concerns as Chinese lenders come under pressure to cut borrowing costs to boost an economy that is close to deflation and facing a protracted housing crisis.

Chinese banks’ net interest margin was 1.54 percent at the end of June, the lowest on record, official data showed.

Minsheng Bank is a second-tier joint-stock bank. It had total assets of 7.7 trillion yuan ($1.1 trillion) at the end of last year, ranking 11th largest among China’s roughly 4,600 banking institutions.

Founded in 1996 as China’s first privately controlled commercial bank, Minsheng Bank has been hit hard by the nation’s ongoing property crisis.

The lender was a major lender to China Evergrande (HK:) Group, which has been at the center of the country’s real estate crisis. It has also been hit by the financial difficulties of developer China Oceanwide, one of the bank’s largest shareholders.

In the first half of this year, Minsheng Bank’s net profit fell 5.5% year-on-year. The mortgage NPL rate was 5.29% in the first half of this year, up from 4.92% in 2023.

(1 USD = 7.0530 renminbi)