China regulator denies it asked foreign banks for executive pay details
China’s securities regulator on Tuesday denied that it and its securities association had asked foreign investment banks for senior executives’ pay details or suggested they implement pay curbs, rejecting media reports.
Bloomberg reported on Friday that Chinese regulators had warned top global banks, during meetings in Shanghai and Beijing this year, against paying their top bankers in China lavishly.
“The reports are not factual,” the China Securities Regulatory Commission (CSRC) said in a statement, adding that no such meetings were held.
The regulator did not specify which reports its statement referred to.
Bloomberg reported that banks, such as Goldman Sachs Group Inc. Credit Suisse Group AG and UBS Group AG, were asked to reduce cash compensation and extend deferred bonuses to three years or more.
As part of President Xi Jinping’s “common prosperity” drive, Beijing is seeking to reduce wealth gaps while curbing disorderly expansion of capital.
China’s securities and fund associations are urging the country’s brokerages and fund houses to set up a sound remuneration system, warning that excessive, or short-term incentives could trigger compliance risks.
The CSRC said on Tuesday that the salary guidelines are designed to “prevent institutions from over-incentivising in the short term” and it has not introduced caps or specific measures on how staff are compensated.
“The CSRC fully respects the discretionary business decision-making of financial institutions,” the regulator said.
Wall Street banks have been aggressively hiring in China, which has allowed majority and fully foreign-owned investment banks and fund management companies to operate onshore as part of its broader opening of a financial services sector worth trillions of dollars.
Eleven foreign firms have managed to take majority or full control of their China units, the CSRC said.
Goldman Sachs and J.P. Morgan are among Western banks moving toward full ownership of their China securities businesses.