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Bankers' pay hikes draw criticism

By Wang Zhenghua (China Daily)
Updated: 2008-05-16 11:42

Fresh rounds of controversy have been unleashed by five domestic banks' recent disclosures of large pay hikes for their senior managers.

Chairman of the mid-sized Shenzhen Development Bank Frank Newman's pre-tax income surged to 22.9 million yuan ($3.27 million) in 2007 from 9.95 million yuan the previous year. And China Minsheng Banking Corp, China Merchants Bank and three other smaller joint stock banks recently released a supplement to their 2007 annual reports in which Minsheng's President Dong Wenbiao reported a pre-tax income of nearly 17.5 million yuan compared with 4.5 million after taxes in 2006.

The disclosures of the pay hikes, which are staggering compared with those of other industries and at State-controlled banks, comes at a time when discussions about the yawning gap between China's rich and poor are heating up.

All 14 Shanghai-listed banks' annual reports have shown substantial income increases for upper-level managers.

Some banks offer executive compensation programs featuring stock option incentives in addition to salaries so that high-level managers' income increases hinge on profit growth.

Fueled mostly by income from interest, the 14 Shanghai-listed banks last year reported an average profit growth of 71.8 percent - a record high and more than double 2006 levels.

However, while increases were reported in lower and mid-level employees' average annual incomes, the robust growth generally failed to benefit them.

For example, employees of Pudong Development Bank, a Shanghai-based, mid-sized commercial lender, reported an average annual income of 366,700 yuan last year -much higher than most cities' per capita annual incomes. However, ordinary employees at these listed banks said their pay increases are much less than they appear.

"I never earned such a large sum of money," said Chen Wei, who worked at a domestic joint stock bank's Shanghai branch for more than six years. "Senior managers earned too much, making the average income of all employees seem larger."

He said such income growth is unsustainable.