
Exclusive: China Minsheng Bank Reduces Beijing Staff Salaries by Up to 50% in Austerity Measures
BEIJING (Reuters) – China Minsheng Bank has implemented pay cuts of up to 50% for employees at its Beijing branch, according to two sources familiar with the situation. This move is significant, marking the largest salary reduction by a major commercial bank in the context of the country’s austerity measures.
In addition to salary cuts, the bank has ceased covering certain work-related expenses and benefits for its largest branch, which employs over 4,000 staff members. These actions are part of a broader strategy involving salary reductions that apply uniformly across the branch. It’s currently unclear whether Minsheng Bank will extend these measures to its other branches.
The 50% salary reduction represents the steepest decrease seen in major Chinese commercial banks in recent years. Both sources, who requested anonymity due to the sensitive nature of the information, indicated that this news has not been disclosed previously.
After the initial report, Minsheng Bank dismissed the claims as "false" without providing further details. The National Financial Regulatory Administration (NFRA), which oversees China’s banking sector, has yet to respond to requests for comment.
The salary reductions align with China’s "common prosperity" initiative, introduced in 2021 to tackle social and income disparities amid a slowdown in the world’s second-largest economy. Both state-owned and private financial institutions in China have begun implementing cost-cutting measures, which have included salary and bonus reductions, as well as requests for employees to adopt more modest attire.
For instance, China Construction Bank has required employees at its headquarters to accept a pay cut of at least 10%, while China Merchants Fund Management recently asked senior executives to return any pay exceeding new limits set over the last five years.
These cuts at Minsheng Bank also reflect ongoing profitability challenges, as Chinese banks face pressure to lower lending rates to stimulate an economy confronting potential deflation and a persistent property market crisis. Recent figures show that Chinese banks’ net interest margin was recorded at a historic low of 1.54% at the end of June.
Minsheng Bank, categorized as a second-tier joint-stock bank, reported total assets of 7.7 trillion yuan (approximately $1.1 trillion) as of the end of the previous year, making it the 11th largest among China’s roughly 4,600 banking institutions. Founded in 1996 as the country’s first privately controlled commercial bank, Minsheng has been significantly impacted by the ongoing property crisis, being a major creditor to China Evergrande Group, a key player in the real estate turmoil. The bank has also faced challenges stemming from the financial troubles of one of its largest shareholders, China Oceanwide.
In the first half of this year, Minsheng Bank saw a 5.5% decline in net profit year-on-year, with its non-performing loan ratio for real estate loans rising to 5.29%, up from 4.92% earlier in the year.