China’s CITIC cuts banker pay at CLSA

China’s CITIC Securities is slashing base salaries for over 100 bankers at its Hong Kong-based platform, CLSA, Reuters reported on Wednesday citing two sources familiar with the matter.

The move comes in the wake of a decline in deal activity and pressure to narrow the pay gap with mainland China operations.

The salary reductions, ranging from 15 per cent to 30 per cent, represent a significant departure from the industry norm. Base pay in investment banking typically remains stable, with fluctuations occurring more in bonuses.

CLSA began notifying its affected bankers on Wednesday, impacting roughly 110 Hong Kong-based employees.

This marks the first instance of a Chinese investment bank cutting base salaries outside its domestic market. The decision reflects the uncertain outlook for Chinese companies’ near-term offshore deal making activities.

The pay cuts followed CITIC’s move to reduce base salaries within its mainland investment banking division by up to 15 per cent in June 2023. The move aligned with the Chinese government’s call for reducing income inequality within the financial sector.

Notably, offshore bankers at CLSA often receive 20 per cent to 50 per cent higher base salaries compared to their mainland counterparts within the same banking group.

The slowdown is not limited to CITIC. Major international banks like Bank of America, HSBC, and Morgan Stanley have also laid off dozens of China-focused bankers in 2024, following similar job cuts in 2023.

China International Capital Corp (CICC), a competitor to CITIC, also plans to reduce its investment banking headcount by at least 10 per cent this year, affecting over 200 bankers, as reported by Reuters earlier this month.