Australian banking major ANZ, currently the worst performing banking stock's amongst the major lenders says it intends to cut back on pay rises for at least 900 of its most senior most executives to no more than one per cent amid a decline in lending.

The pay rise cap implies that group one and two executives will have their salaries frozen for at least the next year according to a letter written to staff of the bank by chief executive Mike Smith dated September 19th.

"I realize that for some this is a difficult message, but as leaders of our business, it is the right thing for us to do in the current climate," Smith said

Melbourne based ANZ is currently operating against a backdrop of slower earnings growth which is the result of some of the highest borrowing costs in the developed world, as falling property valuations has caused a drop in demand for home loans, which have reached their lowest level in three decades.

Rivals CBA, Australia's largest lender is also seeking to cut is cost to income ratio, whilst Westpac says it is introducing " productivity initiatives" in its effort to cut its costs.

Mr. Smith in his letter said that the salary freeze was primarily aimed at those in the lower salary range and "performing well"

"The environment for banks globally is becoming more difficult and we believe showing leadership from the top by demonstrating restraint on costs is the right thing to do for the business and for our shareholders," an ANZ spokesman said in an email statement.

In August ANZ shares declined the most in over a year, after the lender announced that income from trading fell during the quarter ending June 30th. ANZ will announce full year fiscal earnings for the year ending September 30th on November 3rd.

CBA in contrast has embarked on cost cutting which does not include the cutting of jobs, which is being dubbed "Project 35" according to a spokesperson for the lender.


Source: Money AU