HONG KONG: The government will appoint in summer Norman Chan as new head of the city's de facto central bank, but on a much lower salary than outgoing Chief Executive Joseph Yam, whose high remuneration has drawn sharp criticisms, a source familiar with the situation said Friday.

The government is likely to appoint Chan, a former deputy of Yam at the Hong Kong Monetary Authority (HKMA) and now director of Hong Kong Chief Executive Donald Tsang's office, on a five-year contract, the source said.

The government announced Tuesday that Yam would leave the HKMA on Oct 1 after 16 years at the helm of the HKMA. He was criticized by some legislators for his annual salary of HK$7.8 million ($1 million), which a local legislative paper said made him the world's highest paid central banker. Including bonuses and other payments, Yam took home $1.5 million last year.

In contrast, US Federal Reserve Chairman Ben Bernanke earns an annual salary of $191,300 while Bank of England Governor Mervyn King is paid 275,000 pounds sterling ($436,200) a year.

Yam had no fixed term when he was appointed the first chief executive of the HKMA in 1993. He was criticized by some legislators for staying in his post for too long.

Chan resigned from the HKMA in 2005 and spent two years as Asia vice-chairman at Standard Chartered Bank before being appointed director of Tsang's office in July 2007.

Sources also said the three-person selection committee, which was announced by Financial Secretary John Tsang on Thursday, was actually formed last year. And it, too, has nominated Chan as Yam's successor.

The selection committee consists of Li & Fung Group Chairman Victor Fung, Executive Council member Marvin Cheung and former chairman of HSBC Holdings John Bond.

To take the top job in Hong Kong's central bank, one must be experienced in fund management, familiar with the financial and banking systems, closely connected to the financial industry on the mainland and an ethnic Chinese, the sources said.

Yam has so far refused to say where he will head after leaving HKMA. However, Beijing-based Caijing magazine reported earlier this month Yam may provide advisory work to the People's Bank of China (PBoC), the nation's central bank.

The magazine's website said PBoC may ask Yam to be an advisor after his retirement from HKMA, without identifying the source. The report has not been independently confirmed.

In the Legislative Council meeting Thursday, Yam stressed that he will not work in any private enterprise after leaving the HKMA.

Reuters contributed to the story

(HK Edition 05/23/2009 page5)