Rumors stating that some CEOs at local banks receive salaries of over US$1 million a year have sparked debate over whether they should be paid that much.
Former central bank governor Cao Sy Kiem said existing laws allow partly private banks to pay their managers based on revenue. Incomes are also regulated by the government via taxes, and high salaries mean more tax revenues for the country, he said in a report published by news website VnExpress on Tuesday.
But Kiem said salaries must be calculated to make sure they are not too high and threaten banking safety.
"It's unreasonable if bank CEOs receive much higher salaries than others," he said. "It's even more unacceptable for banks to pay huge salaries to their managers when the economy is going through a difficult period."
Kiem noted that while the economy expanded only 5.32 percent last year, the lowest growth rate in a decade, the banking sector still posted huge profits of more than VND29 trillion ($1.5 billion), up 55 percent from the previous year.
Rumors started this month that the most sought-after CEOs in the banking sector receive salaries of up to $1.2 million. But VnExpress quoted some industry insid ers as saying it's unlikely that a CEO has such a high salary. However, they said a total income, including earnings on stocks, for a CEO of a bank can easily reach $1 million.
A source from the central bank said data collected by the bank over the past month showed that salaries for CEOs at commercial banks are not as high as rumored.
Still, the data may not reflect the reality and the State Bank of Vietnam has reported the issue to the Ministry of Labor, War Invalids and Social Affairs, the source said in the VnExpress report.
Kiem said the central bank may need to step in when high salaries affect banking safety, even though it's not the bank's job. "Criticism
against banks will mount even if they pay taxes and do not violate the laws," he added.
But Nguyen Duy Hung, chairman of Ho Chi Minh City-based Saigon Securities Inc., which invests in several banks, said there's no point debating whether salaries of $1 million for CEOs are high or not.
What really matters is if they do their job well or not, he said.
"If a CEO can make tens or hundreds of millions of US dollars in profit, why not pay them $1 million? But if a CEO is inept, they don't even deserve a salary of $100."