SCMP:Eightfold rise in funding to investigate bank gripe

The Monetary Authority will spend HK$138 million this year to handle complaints against banking services - an eightfold increase on last year, before US investment bank Lehman Brothers went bankrupt.

It spent HK$17 million in this area last year. In the new plan, most of the money, some HK$84 million, will be used to pay for extra staff to handle complaints.

The funding was detailed in the authority's annual report published yesterday - which also revealed that Joseph Yam Chi-kwong, its chief executive, enjoyed a pay rise of 15.44 per cent last year, pocketing HK$11.93 million.

Mr Yam, one of the best paid central bankers in the world, saw his fixed pay rise 8.38 per cent to HK$7.783 million, while his performance-linked variable pay increased 15.87 per cent to HK$3.176 million. He also received other benefits.

The authority's three deputy chief executives averaged HK$7.04 million, and the 13 executive directors averaged HK$4.20 million.

Democratic Party lawmaker Kam Nai-wai said he was unhappy at Mr Yam's salary increase. He said that as the authority unveiled in January a full-year investment loss of HK$74.9 billion for the Exchange Fund, he could not find a reason why Mr Yam could enjoy such a large pay rise.

Mr Kam said the eightfold increase in spending to handle complaints against banking services was a reflection of underspending and understaffing in the authority's investigation efforts before the Lehman Brothers debacle.

Civic Party lawmaker Ronny Tong Ka-wah said Mr Yam's pay rise was incomprehensible. He questioned how HK$138 million would be spent as he had not seen any obvious results from the investigative work already done by the authority into matters relating to Lehmans Brothers.

Hong Kong investors lost billions on minibonds guaranteed by Lehman Brothers. They have urged Mr Yam to give up his bonuses and cut his pay for the Exchange Fund losses and what they said was poor regulation of banks that had dishonestly selling some financial products.

The authority said on March 27 it would freeze the salaries of Mr Yam and about 600 employees this year. Last year it reduced their variable pay - similar to a bonus - by 30 per cent. This cut the bonus to the equivalent of two months' pay on average, down from 2.9 months in 2007.

The city's de facto central bank budgeted staff costs of HK$656 million for the year, a rise of 3.96 per cent, making up 78.5 per cent of the total administrative expenditure budget of HK$836 million. In the report, Mr Yam described the global meltdown as "some of the most dramatic events in living memory". He said local banks were not insulated from the crisis, with profitability deteriorating and cost-to-income ratios rising.