Money for ice creams, random bonuses, commuting allowances…the sort of strange benefits associated with Chinese banks have disappeared for all employees as firms seek to quash any whiff of corruption that has blighted the senior ranks. But as trite as this might sound, bankers in the region are decidedly more hard up now that these quirky benefits have disappeared.
“It constitutes quite a big part of my total income,” says one junior banker in a central province in China, who asked not to be named. “We used to have communication allowance, lunch subsidies, festival fees, high-temperature allowances, supermarket coupons, etc, which could add up to as much as 30 to 40% of my income.”
“The more senior you are, the smaller this ratio becomes because senior executives get much higher year-end bonus,” she adds.
Chinese state-owned banks have always paid less than their private sector rivals, but in order to make up for the difference, they handed out various forms of fees and allowances to keep their employees happy.
These can appear quirky to those outside China. For example, ‘high-temperature’ allowances are handed out when temperature reaches certain levels (various in regions) so that staff can use it to buy ice-creams or cold drinks; and festival fees are handed out at some traditional Chinese festivals like Spring Festival or Mid-Autumn Festival.
Sometimes, the benefits even go beyond cash. Banks would give out mooncakes to employees at Mid-Autumn Festival, which is this festival’s custom. Rice dumplings are handed out at the Dragon Boat Festival. This might sound weird to outsiders, but it has been a long-time custom in China’s state banking sector.
One thing to note here, however, is that such benefits seem only exist in traditional commercial banks, rather than the securities firms which are also state-owned, but at the same time more skewed to investment banking. One analyst at a Chinese securities firm confirmed that there’s no such allowances in her firm, let alone the “real stuff”.
Good old days are gone
However, as the growth of China’s economy starts to slow down, plus the new leadership’s anti-corruption campaign since they took over in late 2012, many of such benefits are gone by now. Predictably, bank staff’s total income is seriously affected.
“State banks’ bosses, for fear of being embroiled into anti-corruption campaigns, have tightened up finance controlling now, ” says a veteran Chinese banker in Shanghai, “As a result, most allowances are abolished. No more real stuff.”
He notes that even if there are still banks keeping handing out allowances, it’s likely to be individual case and even then a token amount.
The junior banker admitted that the cut of such perks have immensely affected her total compensation. “Everyone knows banks are cutting pay, but for us, it’s mainly cutting the perks,” she complains. “The workload is getting heavier, yet my income is getting less and less.”
All of this will lead to people leaving, perhaps not surprisingly. Maggie Ge, a consultant of Financial Service at Zhongyi International, a search firm, tells us that she’s seen an increasing number of people leaving state-owned banks because of the cut of perks. Many of them are joining the booming internet finance sector, according to Ge, with a small number joining privately-owned banks.
Those who chose to leave the banking sector altogether would move to the corporate side, taking up roles in finance, treasury or risk control, says the junior banker.
Banks of course have noticed this exodus, but the fact that the order comes from the nation’s top leadership means there’s really not a lot they can do. Consequently, banks are not making much effort to prevent staff from leaving. “State banks don’t normally have a retention policy,” Ge of Zhongyi says. “It largely depends on one’s personal relationship with the boss.”