China restricts bank executives bonuses

BEIJING: China on Wednesday issued rules restricting bonus payments for bankers, in the latest effort to rein in lending and address growing discontent at the nation's widening wealth gap.

In a bid to prevent rash lending commercial banks will be able to reclaim bonuses already paid to executives and suspend future payments if their actions result in big losses, the China Banking Regulatory Commission said.

They must also retain at least 40 per cent of bonus payments for three years, the regulator said on its website. The amount of bad debts held by a bank will be one of the factors taken into consideration when assessing an executive's performance, it added. The rules "will help banks learn lessons from the financial crisis" and prevent "imprudent practices of bank employees", the statement said.

Beijing has taken several steps in recent months to rein in lending, such as hiking bank reserve ratios, after an explosion of new loans raised fears of inflation, economic overheating and bad debts. There also are concerns that the growing rural-urban wealth disparity could trigger social unrest.