The banking sector has so far been considered to bring about much higher income than other sectors and bankers have salary income amounting to several hundreds of millions of dong per month. However, does that income commensurate with the efforts and risks when bank leadership is supposed to be… a dangerous occupation?
Bankers receive almost 300 million dong monthly salary is the recently released survey result announced by Navigos Search. Specifically, in Q4/2017, the highest monthly salary belonged to the senior management position in a bank with nearly 300 million dong. Many other middle and senior management positions in such sectors as production, finance and banking, consumer goods, retail and services, etc. also got high salary from 100 million dong to 190 million dong per month.
The 2018 annual general meeting (AGM) is taking place with 2018 targets and plans submitted to shareholders for approval, of which, one of the topics of interest is the remuneration of the Board of directors, Control Board, especially in banks that are determined to say “no” to dividends with many different reasons. However, according to bankers, the remuneration they receive each year is still not worth the heavy responsibility of doing business in monetary sector.
Though the profit picture is getting better, the pressure to handle bad debt and manage risks remains a burden for regulators. Leaders of banks, regardless of days and nights, must continuously meet with their subordinates to find out the best solution for the bad debt issue, risk management and profit growth. Therefore, according to many bank leaders, shareholders cannot “compare” the remuneration for the Board of directors, Control Board with low dividends.
Specifically, at the 2018 AGM on March 29, explaining about the remuneration for bank leaders, VIB said in 2017, shareholders of the bank approved the plan to use two percent pre-tax profit to make payment for the Board of directors and Control Board, equal to 28 billion dong. In 2017, VIB attained 1.405 trillion dong pre-tax profit, doubling from 2016 and completed 187 percent compared to the assigned plan.
In the plan for 2018, VIB will increase the pre-tax profit to 2.005 trillion dong, the capital mobilisation from customers will swell 20 percent and credit will grow 25 percent. However, this year, the bank’s management board proposed to reduce the remuneration rate for the Board of directors and Control Board at maximum 1.5 percent of the pre-tax profit. As such, if the bank achieved 2.005 trillion dong profit plan, the remuneration for the Board of directors and Control Board will be about 30 billion dong.
At the recently held AGM of Techcombank, the bank’s board of directors decided to continue paying no 2017 dividend to shareholders in order to create attractiveness for investors when listing shares on HCM City Stock Exchange in the near future. Meanwhile, Techcombank’s 2017 business results were very impressive, reaching more than eight trillion dong.
The fixed remuneration for the Board of directors and Control Board of this bank was 29 billion dong for 11 members, down two billion dong compared to the plan set at the beginning of last year. The remuneration for the Board of directors and Control Board in 2018 is also fixed at nearly 32 billion dong. However, the Board of directors and Control Board did not receive remuneration for the achievements in 2017 and plan to continue doing this in 2018.
At the AGM on March 31, OCB’s Board of directors proposed shareholders to approve the total remuneration and allowance for 2018 operations of the Board of directors and Control Board at 20 billion dong (equal to one percent of the pre-tax profit that the bank is expected to achieve in 2018 at two trillion dong).
For MB, it is expected that one percent of the after-tax profit of the fiscal year 2018 will be spent on the remuneration and operating budget of the Board of directors and Control Board. In 2018, MB plans to earn 6.8 trillion dong pre-tax profit, up 47 percent from 2017, of which, the profit brought to shareholders of the parent bank will be 6.5 trillion dong, up 21 percent from the previous year. The bank also plans to make 2018 dividend payment at no less than 11 percent.
VPBank spent as much as 49 billion dong on paying salaries and other allowances to Board members, Control Board and Board of directors in 2017, up 47 percent from 2016. With five Board members, three members in the Control Board and nine members in the Board of directors, a senior leader of VPBank received an average of more than 2.88 billion dong salaries and other allowances in 2017. Noticeably, with the same positions as Nguyen Duc Vinh (member of the Board of directors cum CEO), the remuneration is probably much higher than the aforementioned average.
Sacombank raised the remuneration for the Board of directors and Control Board in 2017 by more than 2.5 times compared to 2016, to 18.5 billion dong. Meanwhile, nearly 20 people in the Board of directors were paid a total of more than 54 billion dong, down 15 percent from 2016. On average, each banker at Sacombank received as much as 2.9 billion dong last year, or about 238 million dong per month.
However, senior leaders of many banks still suppose that the current remuneration is still not commensurate with the heavy responsibility they have to shoulder.
Regarding shareholders’ concerns about why over the last many years, Sacombank still said no to dividend. Meanwhile, the Board of directors and Control Board still received “huge” remuneration, Duong Cong Minh, Chair of the bank said last year, to handle the huge bad debt of 20 trillion dong out of the total of nearly 100 trillion dong, he participated in no less than 100 meetings with subordinates to find out the best solution to strengthen the bad debt settlement and restructuring process regardless of days and nights.
Meanwhile, when investing in Sacombank, he himself also wanted to receive dividends but in the context that the bank had to focus all resources to restructure, he could not expect to receive dividend immediately but after 3-5 more years.
Noticeably, in the context that the financial market still has certain difficulties, a senior bank leader said the bad debt settlement process still could not be accelerated, even when the Resolution No.42 was issued. Meanwhile, the risk of new bad debt still arose, requiring the operator to make great efforts in management to limit it to the minimum level.
“Our efforts cannot be measured by such amount of remuneration because in fact, if there are mistakes, the consequences will be very unpredictable. The market is witnessing many big legal cases in the banking sector being put into trial, showing the complexity of this job”, said the aforementioned leader.
Regarding the concerns of shareholders about remuneration for the Board of directors, Control Board, Vo Tan Hoang Van, member of the Board cum CEO of SCB said the remuneration of the Board of directors should be calculated based on bank profit. Van said SCB calculates the remuneration on a fixed and non-recurring basis. The average monthly salary for each board member is more than 100 million dong per month.
The reality shows that this figure is not high compared to the contribution of the Board of directors because it includes such costs as travel, business trips, reception, etc. On the other hand, some members of the Board only received a small part of the remuneration while the rest was contributed to SCB’s Mutual Fund to support the bank’s employees. SCB’s remuneration for the Board of directors and Control Board in 2017 was 13 billion dong.
In fact, remuneration of bank leaders has always been one of the hot issues at the AGM season besides profit, bad debt and dividend. According to bank leaders, the payment of remuneration for the Board of directors, Control Board at few percent out of the total pre-tax profit is a matter of course. However, besides banks that make reasonable payment, there cannot avoid the fact that leaders at some banks made shareholders to feel dissatisfied.
This used to happen at Eximbank when at the 2017 AGM, shareholders of this bank proposed to recover 52 billion dong exceeding remuneration paid to the former bankers in the three previous consecutive years (2013, 2014, and 2015) but still has had no results so far.
The 2018 AGM of Eximbank still saw a proposed letter to shareholders for their approval of the remuneration for the Control Board in 2017 at 6.5 billion dong while maintaining this level for 2018. The remuneration for the Board of directors in 2018 was also submitted to Eximbank’s shareholders for approval at two percent out of the total profit in 2018 (the target is 1.6 trillion dong) but this remuneration would not be lower than 15 billion dong. However, in the recently released document, there was no document about remuneration for the bank’s Board of directors in 2017.
Dr Nguyen Tri Hieu, finance and banking expert said banking personnel, especially senior ones, will have a lot of changes in the near future due to impacts from the Law on amendment and supplementation of some articles of the Law on credit organisations which took effect from January 15, 2018. According to the new regulation, senior bank leaders will not be allowed to concurrently hold key positions in other businesses.
Specifically, Chair of the Board of directors, Chair of members’ council, and CEO of credit organisations must not concurrently be Chair, member of the board council, Chair of members’ council, company chair, CEO (Director), deputy Chair (Vice director) or equivalent positions in other businesses.
In fact, personnel at some banks have fluctuated after this year’s AGM. Such leaders as Duong Cong Minh Sacombank as well as Hien SHB, Ho Hung Anh Techcombank, etc. have chosen to be Chair at these banks. Meanwhile, Techcombank will also re-elect the Board of directors for 2018-2022 period. Accordingly, Chair of Kienlongbank Vo Quoc Thang will no longer hold position at the bank to keep the position as Chair of Dong Tam group.
