Bank CEO Salaries

Bank CEO Salaries
29-Nov-10, TKP

Following Nepal Rastra Bank’s much publicised move to cap the salaries and benefits of chief executive officers of banks and financial institutions, interest in how much they actually earn has grown.

According to details obtained by the Post, the top dogs pocket Rs 585,000 to Rs 25.24 million a year. Among the 27 commercial banks in operation as of the last fiscal year, Standard Chartered Bank Nepal’s CEO Sujit Mundul earns the most while the management chief of Nepal Bank Limited who was appointed by the central bank has the smallest salary.

It means that 27 CEOs have salaries ranging of Rs 45,000 to Rs 19,42,000 a month. Their monthly average salary stands at Rs 600,000 a month. These banks spent a total of Rs 210.55 million on their CEO’s salary in fiscal 2009-10. This amount does not include performance based pay and other perquisites such as expenses for vehicles and newspapers.

Among fully Nepali-owned banks, Radhes Pant, CEO of Kumari Bank, has the highest fixed salary. He gets Rs 1.04 million per month.

Although Standard Chartered Bank has the highest salary for CEOs, it is exempt from the central bank’s recently introduced guidelines as the chief is serving here under a technical service agreement (TSA) made with its parent bank.

As per the guidelines, the fixed annual compensation should be up to 5 percent of the total average expense for all employees over the last three years or 0.025 percent of the total assets the BFIs have maintained in the previous year, whichever is lower.

Bankers who have been opposing the central bank’s attempt to cap their salaries since the issue was floated are still crying foul. Kumari CEO Pant said such a rule could lead banks to hire more people and ramp up deposit collection and lending in order to increase staff expenses and assets so that CEOs could draw higher salaries.

“This will also discourage talent from entering the banking industry as top managers,” he said. When asked if his pay was higher than permitted by the guidelines, Pant said he would have to think about it.

Except for Standard Chartered Bank, other joint venture banks, Everest and Nepal SBI, pay their CEOs less than what most CEOs of private sector banks are getting.

Everest’s CEO P.K. Mohapatra gets Rs 106,000 a month. Likewise, the monthly salary of the CEO of Nepal SBI is Rs 117,000.

“Even if all other facilities such as accommodations are included, my salary does not come close to what some CEOs of Nepali private sector banks are getting,” said Mohapatra.

According to him, he does not get extra compensation from the parent bank Punjab National Bank in India except what has been written in the TSA. He, however, maintained that CEO salaries should be market driven and that the bank’s board should have the absolute right to fix them.

Government-owned banks and banks in which the government holds a stake pay less than private sector banks. They have been excluded from the central bank’s guidelines on salaries.