China International Capital Corp. has scaled back travel perks for senior bankers to bring the nation’s most international brokerage in line with Xi Jinping’s “common prosperity” drive, according to an internal document seen by Bloomberg News.
(Bloomberg) — China International Capital Corp. has scaled back travel perks for senior bankers to bring the nation’s most international brokerage in line with Xi Jinping’s “common prosperity” drive, according to an internal document seen by Bloomberg News.
The first global joint-venture investment bank in China no longer allows managing and executive directors to fly business class on international and domestic routes, and requires them to book the cheapest seats on most trains. Hotel accommodation, including taxes and breakfast, has been cut by as much as 38% to 850 yuan ($123) per day in first-tier cities, according to the document issued in the middle of last year.
Under Xi’s common prosperity campaign, China has launched a sweeping crackdown on the private sector to rein in “disorderly expansion of capital.” The nation’s biggest state-controlled securities firms and asset managers are drafting plans to narrow the compensation gap between senior and junior staff while Wall Street banks operating in the country have also been warned over lavish pay.
For Beijing-based CICC, the new travel measures reflect its commitment to “strictly implement the spirit” of government regulations and follow the expense policy of its state-owned parent company，according to the document. CICC is China’s third-biggest broker by market capitalization.
Other big Chinese brokerages, including Citic Securities Co. and CSC Financial Co., have already cut travel budget as policy makers are pressuring the the biggest financial groups to reduce salaries and costs to support China’s recovery from the pandemic. Financial firms, including China’s massive sovereign wealth fund and its biggest banks, were given details on how to limit pay at the beginning of 2021 by the Ministry of Finance, people with knowledge of the matter have said.
The so-called eight-point rules, issued in 2012 by the Communist Party to fight corruption, were aimed at instilling discipline among party members and addressing the practice of extravagance and privilege that had permeated Chinese officialdom. Overseas subsidiaries need to come up with their own plan reflecting the essence of the eight-point measures, the document showed.
Spokespeople at CICC couldn’t be reached for a comment.
Hard Seats
CICC’s managing and executive directors have been asked to fly coach for both inbound and outbound flights, and most train rides should be booked on the cheapest “hard seats,” or hard beds or second-class soft seats.
Bankers are no longer allowed to use corporate cars to go to high-end clubs, entertainment venues such as karaoke bars or scenic spots for business purposes. While the private use of corporate cars has always been banned, the new directives list specific destinations, including commutes to hospitals, schools, shopping malls and offices, highlighting more stringent supervision to curb potential misuse, according to the document.
CICC was set up by former Premier Zhu Rongji in 1995 to help restructure the Chinese economy as the country was launching a shakeup of its state-run industrial sector. Morgan Stanley once held a 34% stake, and TPG Capital LP, KKR & Co. and GIC Pte were also investors before gradually selling their holdings over time.
CICC’s travel perks could be part of the broad pay cuts facing the senior executives across China’s $58 trillion financial system. At least four of the biggest state-controlled securities firms and asset managers are drafting plans to narrow the compensation gap between senior and junior staff, people familiar said in November.
CICC is 40% owned by Central Huijin Investment Ltd., established in 2003 to exercise the rights and obligations of major state-owned financial enterprises on behalf of the State Council. The bank was the No. 2 underwriter for global initial public offerings in 2022, a year in which China topped most countries for deals.
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