This chapter describes the international and domestic backgrounds related to the regulations and practices of bankers’ remuneration in the UK and China. It provides an overview of the bank failures in the UK during the GFC and the practice of bankers’ remuneration incentives, which was a significant contributing factor to these bank failures. It also summarises the evolution and development of the modern banking system in China and the transitional reform of corporate governance and remuneration incentives in Chinese banks. Based on these backgrounds, this chapter highlights the rationales for the regulations of bankers’ remuneration in the UK and China respectively.

This chapter describes and analyses the traditional way adopted by Chinese banks to manage and incentivise bankers in the context of state ownership and intervention. It provides an overview of the modernisation reform of Chinese banks and argues that the essential factor that contributed to the successful reform was the predominant role of the state. The governance of banks was subject to state intervention, and bankers were identified and managed as state cadres. Therefore, bankers’ remuneration was administratively managed, and bankers were incentivised with the opportunity of political promotion. Reciprocally, the administration of remuneration and political incentives acted as a channel for state intervention in banks. However, this administrative and politicised approach was inconsistent with the principles of modern corporate governance, and reform to push forward the modernisation of bankers’ remuneration was considered necessary.