And Bloomberg reports that that pay-to-performance gap is set to widen this year. The state-controlled Chinese lender, led by Chairman Jiang Jianqing, may post second-quarter net income of $9.63bn on August 30th, while Bank of China Ltd. will probably report $5.44bn, according to analysts’ estimates. New York-based JPMorgan last month reported a 9% decline to $4.96bn following its trading loss in London.
Pay hasn’t kept pace with earnings in China, where government-appointed bankers have escaped the ire directed at overseas rivals for losing money on complex derivatives, money laundering or rigging rates. Still, the banks’ shares remain weighed down by concern that slowing economic growth will trigger defaults by developers and local governments.
'Chinese banks are risk averse due to culture, a different executive compensation structure' and the profitability of their lending operations, said Himanshu Shah, Chief Investment Officer of Shah Capital Management in Raleigh, North Carolina. However, the banks are changing and will 'resemble their Western counterparts to a great extent over the next five years'.
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