Chinese brokerage CICC cutting deal makers’ base pay by 25%, sources say
- Cuts highlight the challenges Chinese financial firms face amid a slowing economy and sluggish IPOs in the main listing destinations in China and Hong Kong
- Money raised via IPOs by Chinese companies, plunged 80 per cent to US$2.9 billion in the first quarter compared to a year earlier, according to LSEG
China International Capital Corp (CICC) is cutting the base pay of onshore investment bankers by as much as 25 per cent, three sources said, in a major effort to reduce costs amid volatile markets and Beijing’s austerity drive.
Some of the impacted deal makers were notified on Friday about the cuts, said the sources, who have knowledge of the pay reductions but declined to be named as they are not authorised to speak to the media.
The cuts will take immediate effect, two of the sources said. CICC did not immediately respond to Reuters’ request for comment on Sunday.
The salary cuts will affect more than 2,000 bankers, and come after one of the largest investment banks in China by headcount trimmed bankers’ bonuses last year by up to 40 per cent, as Reuters reported in April last year.
The rare move by the top investment bank to reduce base pay by as much as a quarter underscores the challenges Chinese financial firms face amid a slowing economy and sluggish IPOs in the main listing destinations in China and Hong Kong.
Investment bankers are typically subject to volatile bonus payments based on performance but drastic reductions in base salary are less common. Last year rival Citic Securities lowered pay across its investment banking division by up to 15 per cent, Reuters reported in June, citing sources.