Public banks’ “reverse wage recovery” ledger: Bank of China recovered more than 100 million yuan in three years—does it signal maturity or a passive move?

UI News Reporter | Zeng Lingjun

“Can performance bonuses that have been received still be reclaimed?” As the 2025 annual reports of listed banks are gradually disclosed, “reverse salary claims”—that is, the recovery of performance-based compensation—once again become the focus of public attention.

According to UI News reporters’ statistics, as of April 6, among the listed banks that have disclosed their 2025 annual reports, almost all mention the implementation of the mechanism for reclaiming performance-based pay in their reports. Among them, Bank of China (601988.SH, 03988.HK) has the largest recovery amount, exceeding 47 million yuan; Yibin Bank (02596.HK) has the smallest, only 2,300 yuan.

“Banking is a typical industry of ‘profit front-loading, risk back-end’,” a risk management officer from a joint-stock bank branch told UI News. “A loan can generate profit when issued, but risks may only surface years later. If performance-based pay is not paid with a delay or reclaimed, it’s easy for employees to pursue short-term performance at the expense of long-term risks, creating moral hazard.”

Significant differences exist among banks, with Bank of China leading

From the data disclosed for 2025, Bank of China ranks first among disclosed annual reports, with a recovery amount of 47.7182 million yuan and 4,630 instances of recovery.

Notably, Bank of China has disclosed recovery information for three consecutive years: 22.75 million yuan recovered in 2023 involving 2,059 people; 32.5 million yuan recovered in 2024 involving 2,469 people; and 47.1782 million yuan recovered in 2025 involving 4,630 people. Over three years, the total recovered amount exceeds 102 million yuan, involving a total of 9,158 individuals.

The annual report shows that, based on institution type, size, and risk management responsibilities for key positions, Bank of China delays payment of more than 40% of performance-based pay for senior management and key personnel, with the delay generally lasting no less than three years. It also establishes a system for reclaiming performance pay: if within the employment period there is an abnormal exposure to responsibilities-related risks, part or all of the performance pay already disbursed for a certain period can be recovered, and future payments can be suspended.

Construction Bank’s recovery scale is relatively moderate. In 2025, there were no recoveries involving directors and senior management, but 17 management personnel at the head office and equivalent levels were subject to recovery, involving 1.99 million yuan, a decrease from 26 instances and 3.74 million yuan in 2024.

Among joint-stock banks with disclosed data, Bohai Bank (09668.HK) recovered 19.58 million yuan from 816 instances in 2025, down from 24.03 million yuan from 612 instances in 2024; Huaxia Bank recovered 9.85 million yuan from 577 employees, a significant decrease from 7.51 million yuan from 751 employees in 2024.

Among regional banks, Zhongyuan Bank (01216.HK) had a notable recovery amount of 13.57 million yuan in 2025. This is the second consecutive year that the bank’s recovery exceeded 154.6k yuan, following 20.1076 million yuan in 2024.

Some regional banks, although with relatively small absolute amounts in 2025, also disclosed figures. For example, Ruifeng Bank (601528.SH) recovered 3.8221 million yuan; Dongguan Rural Commercial Bank (09889.HK) recovered a total of 3.66 million yuan; Yunnan Rural Commercial Bank (601077.SH) recovered 2.9093 million yuan; Jinshang Bank (02558.HK) recovered from 30 employees, totaling about 154.6k yuan; Yibin Bank recovered 2,300 yuan.

Industrial and Commercial Bank of China (601398.SH, 01398.HK), China Merchants Bank (600036.SH, 03968.HK), Minsheng Bank (600016.SH, 01988.HK), among others, explicitly state in their annual reports that they have established relevant systems and are implementing them, but do not disclose specific amounts.

Wang Pengbo, a senior analyst at Broadcom Consulting specializing in the financial industry, told UI News that large state-owned banks have big asset bases and long business cycles. Coupled with the recent strengthening of regulatory requirements for responsibility tracing, large-scale recoveries are not surprising. Some city commercial banks have smaller recovery amounts, which does not necessarily mean they have better risk control; it may be that issues have not fully surfaced yet, or that accountability mechanisms are still being improved. “So, you can’t just judge which bank has stronger risk control based on recovery figures alone; you also need to look at more substantive indicators like non-performing loan ratios and reserve coverage ratios.”

Why is “reverse salary claims” becoming necessary?

In fact, the mechanism for reclaiming performance-based pay is not new in 2025. Its policy roots trace back to the “Guidelines for Prudential Regulation of Commercial Bank Compensation” issued by the former China Banking Regulatory Commission in 2010, which first clarified that commercial banks should establish rules for deferred and clawback of performance pay.

“Performance pay recovery,” often called “reverse salary claims,” generally refers to when employees violate discipline or their responsibilities expose them to abnormal risks, the bank, according to relevant regulations, may suspend payment of their performance bonuses or recover part or all of the already paid performance pay depending on the severity.

There are two main views on the nature of “reverse salary claims.” One sees it as a sign of mature bank governance—indicating that banks have the ability to trace risks and enforce responsibility, effectively constraining employee behavior. The other views it as a passive response under operational pressure—an expansion of recovery amounts reflecting pressure on asset quality and increased risk exposure.

Xue Hongyan, a special researcher at Sun Shang Bank, told UI News that from a risk management perspective, “reverse salary claims” are both a sign of bank maturity and a reflection of operational pressure, intertwined. The system originated from the 2010 regulatory guidelines and was further strengthened in 2021. Most financial institutions have now implemented the system. As a sign of maturity, it embodies the concept of linking pay with risk, breaking the traditional “pay without recovery” model, and strengthening the risk responsibility awareness of senior management and key personnel, creating a balanced incentive and restraint system. When banks can accurately link recovery to specific risk events, implement differentiated handling, and establish standardized procedures and appeal channels, it reflects improved risk management capabilities.

Xue Hongyan further told UI News that, from an operational pressure standpoint, recent years have seen slowing profit growth, narrowing interest margins, and increasing non-performing loans. Some banks may expand recovery scope or proportion to cut internal costs, or even controversially include normal benefits in recovery efforts. This indicates a passive tendency under operational pressure, especially when recovery is overly uniform or targeted at grassroots employees.

Tian Lihui, director of the Nankai University Financial Development Research Institute, told UI News that “reverse salary claims” are both a sign of maturity and a necessary response under pressure; the two are not mutually exclusive. This mechanism links compensation incentives with risk-adjusted performance, pushing staff to carefully weigh benefits against risks in business expansion. It marks a shift in bank risk management from “pre-approval” and “mid-term monitoring” to “post-incident accountability,” forming a full-chain closed loop.

“From a pressure perspective, in recent years, some banks have continuously exposed risk assets, and the hidden dangers accumulated from past over-incentivization are gradually being released. Recovery and clawback are objectively ways for banks to hedge against historical risks and digest existing burdens. If effectively implemented, this mechanism indicates that banks have the ability to trace risks and enforce responsibility, but caution is needed against superficial operations. Ultimately, forced maturity is still maturity,” Tian Lihui said.

Wang Pengbo analyzed for UI News that, from an industry perspective, this long-term trend benefits the stability of the banking system—reducing the inertia of heavy lending and light management. However, it could also lead to another problem: some institutions becoming overly conservative, hesitant to lend even when appropriate. Therefore, a better balance between incentives and constraints still needs to be found.

Where is the legal boundary?

How can banks’ “reverse salary claims” be legal and compliant?

In judicial practice, there have been successful cases of recovery. In May 2025, a second-instance civil judgment published on China Judgments Online showed that Guangfa Bank Xi’an Branch’s branch manager Tan Mou, as the responsible person for Suning Real Estate’s credit project, had misconduct in pre-loan investigation, disbursement, and post-loan management, leading to an overdue principal balance of 1.1 billion yuan. The bank imposed administrative demotion and deducted 427.4k yuan of performance pay. Tan Mou filed a lawsuit to claim his salary, but both the first and second-instance courts dismissed his appeal, upholding the original judgment.

However, not all “reverse salary claims” succeed. In 2023, a civil second-instance judgment on China Judgments Online showed that Harbin Bank Tianjin Branch sought nearly 710k yuan in performance pay from a former branch manager Zheng Mou who had left the bank. Both courts rejected the bank’s appeal.

The core reason for rejection was the statute of limitations. According to the “Law on Mediation and Arbitration of Labor Disputes,” the time limit for applying for arbitration of labor disputes is one year, starting from when the employee knew or should have known that their rights were infringed.

Tian Lihui told UI News that in practice, three types of actions are most likely to cross the line into infringing employee rights. First, retroactive application of policies. Courts generally hold that salary recovery rules do not have retroactive effect, and banks cannot rely on newly formulated or revised rules to recover past conduct.

Second, procedural and time limit violations. The arbitration period for labor disputes is one year, calculated from when the bank knew or should have known about the infringement. The Harbin Bank case already shows that recovery requests beyond the arbitration period cannot be supported by courts.

Third, lack of factual basis for responsibility determination. Some banks simply pursue employees after a risk event occurs without establishing a causal link between the loss and the employee’s duties, leading to insufficient evidence and losing cases. The overall low success rate of financial institutions in salary recovery cases indicates that the legitimate exercise of authority cannot come at the expense of procedural justice.

Historically, one of the most controversial aspects of “reverse salary claims” is when banks attribute systemic risks or management errors entirely to grassroots employees.

The risk management officer told UI News, “If a bank’s risk losses are caused by macroeconomic downturns or industry cycles beyond its control, but the bank blames individual credit approval staff and recovers their performance pay, this may exceed reasonable boundaries.”

“Recovery and clawback must follow the principle of fault responsibility—that is, the object of recovery should be employees who have directly or significantly contributed to the risk event. If the bank cannot prove employee fault or minor fault, such broad recovery actions may constitute illegal deduction of wages,” the officer added.