Bank of Communications Co., Ltd.

Sydney Branch

Remuneration Disclosure FYE 31 December 2024

 

(A joint stock company incorporated in the People’s Republic of China with limited liability)

 

1 Introduction 

Background

This Remuneration Disclosure has been prepared in accordance with the requirements under paragraph 92 of the Australian Prudential Regulation Authority (APRA) Prudential Standard CPS 511 Remuneration (CPS 511).  It outlines the internal principles and requirements of Bank of Communications Co., Ltd. (BoCom) in compliance with the APRA Prudential Standard.

Scope

This Remuneration Disclosure applies to all Bank of Communications Co., Ltd. Sydney Branch (BoComAU or Branch) staff, which includes Sydney Branch, Brisbane sub-Branch and Melbourne sub-Branch staff, including those that fall into the following categories:

· Senior Management Team (SMT), which comprises of the General Manager (GM), Deputy General Manager – Banking (DGM-B), Deputy General Manager and Chief Risk Officer (CRO), and Chief Operations Officer (COO);

· Accountable Persons, as defined under the Banking Executive Accountability Regime (BEAR) and the Financial Accountability Regime (FAR), who are currently the Senior Officer Outside Australia (SOOA) and the GM;

· Staff whose primary role is risk management, compliance, internal audit, and financial control (“risk and financial control personnel” as defined by CPS 511). BoComAU practically defines these persons as:

o all staff within the Credit and Risk Management and Internal Control Department, the Compliance and Legal Department, the Internal Audit Team, and the Accounting Department.

· “Material risk-taker” as defined under CPS 511, being those persons whose activities have a material potential impact on the entity’s risk profile, performance and long-term soundness. BoComAU considers this would include:

o senior staff who have a material impact on BoComAU’s risk profile, namely the CRO; and

o senior staff who have a material impact on BoComAU’s performance and financial soundness, namely the DGM - B; and

· Non-risk and financial control staff whose activities, individually or collectively, may affect the financial soundness of the Branch

Periodic review

This document must be reviewed annually by the Administration Department and must be submitted to the Branch Risk Committee for approval before publication.

2 Remuneration objectives and principles 

BoComAU staff reward and remuneration management follows the guidelines listed below:

1.  The remuneration of BoComAU staff will only consist of monetary incentive. No equity incentive will be included. Remuneration will be based on job responsibilities and performance and will otherwise be structured to reflect the matters set out in the Branch’s Remuneration Policy.

2.  BoComAU’s remuneration framework encourages behavior that supports:

(a) Effective management of financial and non-financial risks,

(b) BoComAU’s sustainable performance and long-term financial soundness,

(c) The prevention and mitigation of conduct risk, and

(d) The risk management framework of BoComAU.

3. The quantum of the performance based variable remuneration of risk, compliance, internal audit and financial control staff must not compromise the independence of those staff carrying out their functions.  

4. Remuneration management for BoComAU aligns with BoComAU’s business plan and strategic objectives, and emphasises compliance with all regulatory requirements including those outlined by APRA and BoCom Head Office (HO). 

5.  BoComAU's remuneration arrangements also comply with Fair Work laws and the Banking, Finance and Insurance Award 2020.. 

 

3 Remuneration structure 

For all staff, the remuneration package consists of:

1. Fixed salary

2. Superannuation

3. Bonus (performance based variable remuneration)

BoCom Head Office determine the overall remuneration package available for BoComAU staff, based on the results of the annual performance appraisal of the Branch by BoCom Head Office.

The GM allocates the total bonus pool for all staff except the bonus allocation for himself, the CRO and DGM-B.

Performance based variable remuneration awards will be determined by reference to both financial and non-financial measures that take into account organisational and individual performance (including in relation to the prevention and mitigation of credit, operational, compliance and conduct risk).  

However, when exercising that discretion, the performance based variable remuneration of risk and financial control staff (including any senior management holding those roles) must not be at a level or amount that would compromise the independence of those staff carrying out their functions.  

The following section describes each element of the remuneration package in more detail.

3.1 Fixed salary

At the individual level, BoComAU staff fixed salary is generally determined by the GM, with reference to the market average income level of the local banking industry and with consideration of the specific circumstances of the Branch and each individual staff member. Salaries of local staff are reviewed on an annual basis.

Fixed salary and any salary adjustments for GM, CRO, DGM-B, and expatriate staff, is determined by the Human Resources Department of Head Office and approved by the SOOA.

3.2 Bonus (performance based variable remuneration)

Eligibility

Only staff who have been employed by BoComAU for six months or more by the end of the financial year (31 December) are eligible to be considered for a bonus for that year.  New staff who have commenced employment with BoComAU in the last six months of that calendar year and any staff retiring or who have left during the year are not eligible to be considered.

For staff that have had a change in position during the year, the bonus consideration will be based on actual working time in various positions.

Methodology

The bonus is linked to the annual performance appraisal assessments for both the individual staff member, the relevant department and the Branch performance as a whole. 

Annual performance appraisal assessments

In respect of BoComAU performance assessment, BoCom Head Office sets and provides the Branch with performance targets and indicator scores on an annual basis. 

The Human Resource Department of Head Office is responsible for implementing the annual performance appraisal for the GM of BoComAU based on the completion of Key Performance Indicators (KPI) and a comprehensive evaluation of both GM and Branch performance. 

The GM of BoComAU is responsible for implementing annual performance appraisals for all other members of BoComAU senior management, based on the completion of their own key performance indicators and comprehensive evaluations.

BoComAU Administration Department is responsible for implementing internal annual performance appraisals for both locally recruited staff and expatriate staff. BoComAU Administration Department also assists the Head Office Human Resources Department in implementing the comprehensive evaluation for BoComAU senior management.

BoComAU recognises the need to incorporate both financial and non-financial measures into annual performance appraisal assessments to support the long term financial soundness of BoComAU, its risk management framework, its business plan and strategic objectives, and to reward good risk management.

(1) Bonus determination

BoCom Head Office determines the total bonus remuneration package for BoComAU based on the results of the annual performance appraisal of BoComAU, subject to SOOA approval where required.

(2) Bonus outcome determination

The bonus allocation for the GM, CRO and DGM-B is determined by the HO HR.

However, the SOOA approves the final bonus allocation based on overall Branch performance.

The GM of BoComAU is responsible for determining the bonus outcome of individual staff within the total performance based remuneration package from the Head Office. Individual bonus outcome of staff is approved by BoComAU GM after taking into account the individual’s performance appraisal, that of their Department and of the Branch as a whole.

The GM of BoComAU may also, at his sole discretion and at any time, award an “on the spot” bonus as reward for exceptional performance.

BoComAU shall report the results of the bonus outcome or awards to the Human Resources Department of Head Office and the SOOA.

(3)  Downward-adjustments process

BoComAU may adjust the performance-based remuneration downwards, to zero if appropriate, at any time for any or all employees for the reasons below:

a. Protect the financial soundness of BoComAU;

b. Respond to significant unexpected or unintended consequences that were not foreseen by BoComAU;

c. Better promote the management of financial and non-financial risks;

d. Address failures or breach of accountability, fitness and propriety, or compliance obligations;

e. Address errors or significant misstatement of criteria on which the variable remuneration determination was based;

f. Address significant adverse outcomes for customers or counterparties; or

g. Better address conduct issues.

Adjustment tools for an employee’s performance-based remuneration include:

· in-period adjustment (for situations where BoComAU decides that a bonus payable in the current financial year needs to be adjusted);

· malus (for those whose variable remuneration is subject to deferral requirements under BEAR, FAR and HO policy);

· clawback; and

· overriding discretion of the SOOA.

The Branch GM will, in consultation with BoComAU HR, take all of the above considerations into account in making the decision to adjust an individual staff’s performance-based remuneration downwards. The total downward adjustment to variable remuneration will be proportionate to the impact of any of the above included in section 3.2.2.(4) a-g.

Where a person is under investigation for any of the matters set out in a – g above, variable remuneration must not be paid or vested until the investigation is completed.

BoComAU prohibits indemnifying or insuring (whether directly or through arrangements with another person) employees against the consequences of:

· breaching an obligation under CPS 511; or

· applying in-period adjustment, malus or clawback.

3.3 Superannuation

BoComAU will make superannuation contributions for all staff into a superannuation fund nominated by the staff member themselves (Superannuation Plan), or if no such nomination is made, into a fund nominated by BoComAU. These superannuation contributions will equal the minimum level of superannuation contributions which BoComAU must make for staff under the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992 as amended from time to time.

 

4 Deferred Variable Remuneration 

Deferred variable remuneration arrangements apply to:

a. Accountable Persons under the Banking Executive Accountability Regime (BEAR) and Financial Accountability Regime (FAR);

b. Specified members of BoComAU senior management as determined by HO; and

c. Any highly-paid material risk-takers under CPS 511.

CPS 511 defines a “highly-paid material risk-taker” as a material risk taker whose total fixed remuneration (which includes salary, superannuation, allowances and benefits) plus actual variable remuneration, is equal to or greater than 1 million AUD in a financial year of the entity.

 

‘Material risk-taker’ means a person whose decisions have the potential for a material impact on the entity’s risk profile, performance and long-term soundness. No Branch staff member qualified as a “highly-paid material risk taker” during the 2024 financial year period.

 

BoComAU's Accountable Persons are covered by BEAR (which applies to variable remuneration referable to a performance period prior to 1 January 2025) and FAR (which replaced BEAR from March 2024 and will apply to variable remuneration referable to a performance period starting on 1 January 2025). The Accountable Persons of BoComAU under BEAR and FAR are GM and the SOOA.

 

Under both BEAR and FAR, the relevant proportion of an Accountable Person's variable remuneration must be deferred for at least four years. In the event that an Accountable Person ceases to be an Accountable Person under FAR, because of the person’s death, serious incapacity, serious disability or serious illness, the deferral of the relevant proportion ends on the day on which the person so ceases, and BoComAU is satisfied on reasonable grounds that the person has complied with the person’s accountability obligations.

 

The calculation of the proportion that must be deferred under BEAR and FAR is slightly different. Under FAR it is 40% of the Accountable Person's variable remuneration for the relevant financial year, and under BEAR it is the lower of 40% of variable remuneration and 10% of total remuneration. The requirement to defer under BEAR and FAR does not apply if the amount that would be deferred for a financial year is less than $50,000.

 

If an Accountable Person fails to comply with their accountability obligations, or if there is an adjustment event of the type described in the Branch’s Remuneration Policy, that person's variable remuneration will be reduced by an amount that is proportionate to the failure (or breach) and the amount of the reduction will not be paid to the Accountable Person.

 

A reduction in variable remuneration need not be a reduction of variable remuneration relating to a period in which the failure occurred. Further, the reduction may be a reduction to zero.

 

The deferral period may be extended (e.g. during a period of investigation) if there is reason to believe that an Accountable Person is likely to have failed to comply with his or her accountability obligations, until a determination has been made to pay or withhold the deferred remuneration.

 

BoComAU may determine, (acting reasonably and consistently with BEAR and FAR) the portion of SOOA’s variable remuneration subject to the deferred remuneration obligations, in proportion to the work that the SOOA performs as an Accountable Person.

 

Deferred Variable Remuneration arrangements for specified members of BoComAU senior management as determined by HO Policy

 

The variable remuneration of specified members of BoComAU senior management is conditional on the achievement of performance objectives. 40.1% of their variable remuneration will be deferred for three years.  

 

Where the above person achieved his/her performance target and did not receive a violation notice or disciplinary action from HO, or the regulator during the three years, nor is there a downwards adjustment required for any reason under section 3.2.2(4) a – g of this document, the deferred variable remuneration will be paid in equal thirds over the three years starting from the year immediately following the assessment year.

 

However, where a downward adjustment is required, malus and/or clawback will apply to the deferred variable remuneration.

 

Deferred Variable Remuneration arrangements for Highly-paid Material Risk-takers under CPS 511

 

CPS 511 governs BoComAU’s deferred variable remuneration obligations for any highly-paid material risk-takers. If applicable, BoComAU will defer the relevant proportion of variable remuneration of any highly-paid material risk- taker as required by CPS 511. The payment of any deferred amount would be subject to downward adjustment, malus and/or clawback in accordance with CPS 511 and the Branch’s Remuneration Policy.

      

 

      

5 Governance 

Role of Head Office

The Human Resources Department of Head Office is the chief department responsible for overseas branches’ senior management performance assessments, including evaluation and implementation.

BoComAU SOOA has ultimate responsibility for the sound and prudent management of BoComAU, including the remuneration framework and its effective application.

Role of the SOOA - Senior Officer Outside Australia

BoComAU's SOOA, with delegated authority from the BoCom Board, is responsible for the remuneration oversight duties for the Branch. Specifically, the primary responsibilities of BoComAU's SOOA include:

· Ensuring that regular reviews of the remuneration policy are carried out (at least annually) and approving those reviews;

· With the assistance of the Head Office Human Resources Department, making ultimate decisions on the remuneration package of BoComAU GM and approving the variable remuneration outcome of the GM; 

· Providing robust challenge and independent scrutiny of proposed performance-based components of remuneration for the GM and, on a cohort basis, the highly-paid material risk-takers (if any), other material risk-takers and risk and financial control personnel. Evaluation assessments by the HO Human Resources Department will be taken into account as part of the SOOA’s annual review;

· Approval of downwards adjustments – or to zero if appropriate - to performance based components of remuneration, in relation to persons or classes of persons, if such adjustments are necessary for any reason under section 3.2.2(4) a – g of this document.

Role of BoComAU General Manager

BoComAU GM is responsible for:

· performance assessments of the other BoComAU senior management members;

· determining the final results of performance assessments for both locally recruited staff and expatriate staff of BoComAU;

· determining the bonus outcome for both locally recruited staff and expatriate staff within the remuneration package allocated by Head Office. 

BoComAU GM will undertake the above with due consideration of the objectives and principles contained in CPS 511 and the Branch Remuneration Policy.

 

 

-End-