Banking on Restraint
Rumors of lavish bonuses and high salaries in China’s banking sector have long been a staple of financial gossip. But behind the scenes, a more austere reality is unfolding. Several major Chinese banks have clawed back staff bonuses or cut salaries amid a sluggish economic recovery and Beijing’s ongoing scrutiny of the financial sector. The move reflects the government’s determination to rein in reckless spending and restore discipline in the banking industry.
As the annual reports of China’s leading lenders begin to emerge, the picture of a sector under pressure becomes increasingly clear. State-owned Bank of China, one of the country’s largest financial institutions, recovered 47.18 million yuan (US$6.9 million) from 4,630 individuals in 2025, according to its annual report. This represents a significant increase from the 25.9 million yuan reclaimed in the previous year. Similarly, Commercial Bank of China, another major state-owned lender, disclosed that it had clawed back 32.5 million yuan from 2,300 employees in 2025.
The decision to claw back bonuses and cut salaries is not limited to state-owned institutions. Commercial banks like China Merchants Bank and Bank of Communications have also taken a similar approach. In a statement, China Merchants Bank said that it had recovered 21.3 million yuan from 1,500 employees in 2025, citing “poor performance” as the reason for the clawback. Bank of Communications, on the other hand, cut the salaries of over 10,000 employees by an average of 10% in 2025, according to its annual report.
The move to rein in bonuses and salaries is a response to Beijing’s increasing scrutiny of the financial sector. The Chinese government has been cracking down on excessive spending and risk-taking by lenders, particularly in the wake of the 2020-2021 economic downturn. In recent years, the banking regulator has tightened regulations on lending and deposit rates, and has also imposed stricter capital requirements on lenders.
The impact of these measures is being felt across the industry. Lenders are being forced to be more cautious in their lending decisions, and are focusing on core businesses rather than engaging in high-risk activities. While this may lead to lower profits in the short term, it is seen as a necessary step to restore stability and confidence in the banking sector.
The clawback of bonuses and salaries also reflects the changing attitudes towards compensation in the banking industry. In the past, bonuses were seen as a way to attract and retain top talent, but this approach has come under scrutiny in recent years. The Chinese government has been pushing lenders to adopt more transparent and equitable compensation practices, and to link bonuses to performance metrics.
The move to cut salaries and claw back bonuses has been met with mixed reactions from industry insiders. Some see it as a necessary step to restore discipline in the banking sector, while others view it as a sign of the government’s increasing control over the industry. “It’s a sign that the government is taking a more hands-on approach to regulating the banking sector,” said a senior executive at a state-owned lender. “But it also reflects the challenges facing the industry, particularly in terms of profitability and risk management.”
The implications of the move are far-reaching, and will likely have a ripple effect throughout the economy. As lenders become more cautious in their lending decisions, small and medium-sized enterprises (SMEs) may find it increasingly difficult to access credit. This could have a disproportionate impact on the manufacturing and export sectors, which rely heavily on bank financing.
In response to the government’s measures, lenders are being forced to rethink their business models and strategies. Some are focusing on new areas, such as digital banking and wealth management, while others are exploring new markets and partnerships. The China Banking Regulatory Commission (CBRC) has also been working with lenders to develop new risk management frameworks and stress-testing models.
As the banking sector continues to evolve, it remains to be seen how the government’s measures will play out. Will the move to cut salaries and claw back bonuses lead to a more stable and sustainable industry, or will it stifle innovation and growth? One thing is certain: the Chinese banking sector is at a crossroads, and the choices made in the coming years will have far-reaching consequences for the economy and the financial sector.
In the months ahead, Veridus will be monitoring the situation closely, and providing updates on the latest developments in the Chinese banking sector. As the situation unfolds, one thing is clear: the future of China’s banking industry will be shaped by the government’s determination to promote stability and discipline, and to ensure that lenders operate in the best interests of the economy and society as a whole.