Sources report that CICC, a Chinese brokerage firm, is reducing dealmakers’ base pay by 25% in an exclusive move.

China International Capital Corp (CICC) is making significant cuts to the base pay of onshore investment bankers, with reductions of up to 25%, according to sources familiar with the matter. The move comes as the company aims to reduce costs amidst volatile markets and Beijing’s austerity measures.

The impacted dealmakers were informed of the salary cuts on Friday, with the changes taking immediate effect. This decision will affect over 2,000 bankers at CICC, one of the largest investment banks in China. Last year, the bank had already reduced bankers’ bonuses by up to 40%.

The decision to slash base pay by such a large margin highlights the challenges faced by Chinese financial institutions in the current economic climate. With a slowing economy and sluggish IPO activity in China and Hong Kong, financial firms are under pressure to cut costs.

This move by CICC follows a trend in the industry, with rival CITIC Securities also lowering pay for its investment banking division last year. The reduction in base salary is a rare occurrence in the industry, where bonuses are typically tied to performance.

As China pushes ahead with its “common prosperity” drive, financial firms are under scrutiny to bridge the wealth gap and eliminate excessive displays of wealth. The top graft-busting watchdog in China has vowed to rectify the hedonism of the financial elite.

In addition to the salary cuts, CICC is also considering job cuts at its offshore investment banking unit in Hong Kong. The bank has not yet announced bonuses for 2023, but bankers are expected to receive bonus intimations soon.

Despite the challenges faced by CICC, the company remains a key player in the financial industry, with funds raised via IPOs in mainland China and Hong Kong. The company’s annual report showed a drop in profit attributable to shareholders, reflecting the tough market conditions.