The resignation of Mao Xiaofeng as head of China’s Minsheng Bank – amid a corruption probe – shows that nobody within the senior ranks of Chinese banks should now treat their job security lightly.
Leaders of domestic Chinese banks have traditionally been political appointees who enjoyed a job-for-life culture. And high-profile cases of potential banking corruption in China – most notable US investigations into banks hiring children of high-ranked Chinese executives – have largely focused on Western firms. But Mao’s case demonstrates that China’s ominously named Central Commission for Discipline Inspection now has no qualms about taking its corruption crackdown into the heart of the banking sector.
The extent of Mao’s alleged corruption is so far unclear. The Beijing News reports he helped the wife of Ling Jihua, Hu Jintao’s presidential aide who is now being investigated, secure a job at the bank. “Mao so far is the first top financial official to be investigated in the aftermath of Ling’s case, but I believe he will not be the last one as more senior banking officials and financial elites will be targeted,” Ma Guoxian, a professor of political economy at the Shanghai University of Finance and Economics, told the South China Morning Post
Rank-and-file employees of China’s banks are also being affecting by reforms aimed at making the sector more transparent. As we noted last month, Bank of Communications is instigating “difficult but important” changes that would end fixed payments for staff living expenses. Senior executives at large state enterprises in China, including banks, face pay cuts aimed at making compensation less top-heavy. The shake-up of employment practices in Chinese banking is far from over.
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