(Bloomberg) -- Senior executives across China’s $58 trillion financial system are facing additional pay cuts as firms from investment banks to mutual funds weigh options to comply with President Xi Jinping’s “common prosperity” drive.

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, according to people familiar with the matter, who asked not to be identified as the information is private. Some may submit proposals to regulators in the next few months, the people said.

Capping total pay and deferring incentive bonuses for longer periods are among options being considered, the people said. In Hong Kong, at least two China-backed investment banks are deliberating how to level pay among different ranks but also between their onshore and offshore units, the people added. Compensation levels in Hong Kong have traditionally been significantly higher than in mainland China.

The moves come on the heels of China’s Party Congress, where Xi stressed his “common prosperity” campaign while further consolidating power. Xi’s pledge to create a “well regulated” system of wealth accumulation has fueled intense speculation over how policy makers might achieve that goal, contributing to a deep selloff in Chinese assets last month.

Markets have since rebounded after Xi recalibrated his Covid Zero policies to lessen their economic impact, moved to stabilize China’s fraught relationship with the US and rolled out a sweeping package of support measures for the beleaguered property sector. With financial-sector pay representing a small slice of the overall common prosperity push, the government’s broader plans for that campaign remain unclear.  

Representatives from the Securities Association of China and the Asset Management Association of China didn’t immediately respond to requests seeking comment.

The latest push on pay at securities firms and fund managers follows a spate of measures to limit compensation at state-owned banks and insurers earlier this year. The campaign has also added to challenges to some Wall Street banks, which are trying to beef up their China businesses after winning regulatory approval to take full control of the units in recent years.

China’s Ministry of Finance in August told state-run banks, insurers and the nation’s sovereign wealth fund to further curb executive pay, with base salaries for senior executives capped at 35% of their total package, and more than 40% of bonuses deferred for at least three years. The Asset Management Association of China in June asked fund houses to set up a “reasonable” pay structure and avoid excessive rewards, following similar guidance for brokerages from the securities association in May. 

Earlier in the year, Chinese regulators told banks including Goldman Sachs Group Inc., Credit Suisse Group AG and UBS Group AG to report details on how they compensate their top bankers.

Pay is also coming under pressure as the flow of deals slows from a torrid pace in 2021. Globally, incentive compensation for underwriting debt and equity could plummet more than 45% this year, while bankers advising on mergers could see their bonuses slump 25%, according to a report from consultant Johnson Associates Inc. 

Under the common prosperity campaign, Xi’s administration has launched a sweeping crackdown on the private sector to rein in “disorderly expansion of capital.” The efforts coincide with an ongoing anti-graft crackdown in the finance industry, which has ensnared dozens of officials since its inception in 2021.

China announced earlier this month an investigation into deputy central bank governor Fan Yifei, the highest-ranking official to be targeted in the latest round. In October, Tian Huiyu, China Merchants Bank Co.’s former president, was arrested for suspected bribery and abuse of power.

Tian, who spent nearly nine years building Merchants Bank into the nation’s king of retail banking, was paid about 4.2 million yuan ($590,000) in 2021. While his compensation had been trimmed over the past few years, it remains more than six times higher than the average wage for the bank’s more than 100,000 employees. 

The pay gap is even wider at some Chinese brokerages, even though it still pales in comparison to many firms on Wall Street. Citic Securities Co., the nation’s largest broker by market value, offered a package of nearly 10 million yuan for its President Yang Minghui last year, more than 11 times higher than the average pay of about 876,000 yuan.

--With assistance from Zhang Dingmin.

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