Part of Xi Jinping's 'Gongdong Buyu' Policy Promoted Since 2021
China Minsheng Bank, a major commercial bank, has cut the salaries of employees at its Beijing branch by up to 50%, Reuters reported on the 20th (local time), citing two sources. Established in 1996, Minsheng Bank was the first commercial bank in China founded with private capital.
According to the report, one of the sources said that Minsheng Bank also stopped paying some work-related expenses and other welfare benefits at its Beijing branch. The salary cuts are linked to China's "common prosperity" policy, which has been promoted since 2021 to address social and economic inequalities amid an economic slowdown.
Under this policy, Chinese financial institutions have successively reduced salaries and bonuses and have asked employees not to wear expensive clothes and watches at work.
Earlier, China Construction Bank, the third-largest commercial bank in China, also cut salaries of its headquarters employees by at least 10%, and China Asset Management, one of the top 10 asset management firms in China, reportedly asked senior executives to return part of the salaries they received over the past five years, according to Reuters.
The salary reductions are also related to the declining profitability of Chinese banks. Minsheng Bank's net interest margin (NIM) at the end of June was a record low of 1.54%. The net interest margin is a key source of income for banks, calculated by subtracting funding costs from income generated by assets and dividing the remainder by total assets under management.
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