(Bloomberg) – China’s two biggest investment banks are slashing travel budgets, which will impact junior bankers as well as senior managers as they seek to contain costs and increase profitability.
Starting this month, domestic travel by CEOs of CSC Financial Co. will be downgraded to economy flights and second-class or hard sleeper train seats, according to a memo seen by Bloomberg. Biggest rival Citic Securities Co. has also asked managing directors to travel by coach, according to a separate memo, which did not specify what class of travel they were previously offered.
Spokesmen for Citic Securities and CSC Financial did not immediately respond to emails seeking comment.
The cuts are another example of how policymakers are pressuring the country’s largest public financial groups to cut wages and costs to support China’s recovery from the pandemic. Financial firms were given details of how to curb wages early last year from the finance ministry, and entities such as China’s huge sovereign wealth fund and its largest bank have been affected, people said. knowing the subject.
CSC Financial chairman Wang Changqing will travel first class instead of more expensive business by train, according to the broker’s note. Transportation costs inside and outside airports will no longer be reimbursed as an expense, but will include a transportation allowance of 80 yuan ($ 12) per day, according to the two institutions’ notes. A one-way taxi ride from Shanghai Pudong International Airport to Lujiazui Financial District costs around 200 yuan.
While the cuts don’t stop executives from traveling, they can weaken the morale of bankers accustomed to more attractive perks. Citic Securities also cut daily hotel allowances for non-executive bankers from 200 to 700 yuan per day in major cities from Beijing to Shanghai, according to a person with knowledge of the matter, who asked not to be identified while discussing information. private.
Read more: China asks banks and investment fund to cut wages as economy collapses (2)
Bankers are encouraged to share rooms, according to the memo from CSC Financial. If they do, they can spend 50% more than the per diem for a single banker, compared to the 30% limit previously in place. While bankers can pay for upgrades out of pocket, they have been strongly discouraged from doing so. , said the memo.
Globally, banks are reassessing the need to travel and debating the extent of remote work. HSBC Holdings Plc plans to cut travel costs in half, relying more on video technology and ensuring that people take fewer and longer trips when they travel. Standard Chartered Plc also expects travel costs to drop sharply.
Citic Group Corp., the parent company of Citic Securities, is looking to expand its revenue streams and cut spending, which group vice chairman Xi Guohua said will help last year cope with the market uncertainty and stimulate growth.
The total assets of Citic Securities, China’s largest brokerage firm, exceeded 1 trillion yuan for the first time last year, while the 8.68% return on equity was still lower than Wall’s banks. Street. At CSC Financial, in which Citic Securities had a 4.94% stake, profit fell 12% in the first quarter.
(Updates with more details in the seventh paragraph.)
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