HONG KONG (Reuters) - PricewaterhouseCoopers (PwC) has asked its China-based partners to take a pay cut of up to 50%, two people with knowledge of the matter said, as a regulatory probe into the firm and departure of some of its corporate clients prompt cost cuts and layoffs.

Chinese authorities have been probing PwC's role in auditing China Evergrande Group after the securities regulator accused the troubled property developer in March of a $78-billion fraud over a period of two years through 2020.

Following the launch of the regulatory probe, a growing number of clients has left PwC, prompting layoffs.

In a bid to further cut costs, PwC has asked its top-earning partners in China to accept their annual income, including base salaries and bonuses, being halved, while other partners will see their pay slashed by around 20% to 40%, the sources said.

PwC started notifying partners across its China operations about the pay reductions earlier this month, and the cuts would take effect as soon as next month, said one of the people.

Both sources declined to be named as the information remains confidential.

PwC declined to comment.

PwC's senior China partners make 5 million yuan ($688,914) or above in annual income, while mid-level partners make compensation of 2-3 million yuan. Average starting pay for junior partners is about 1.5 million yuan, one of the sources said.

Some Chinese financial institutions have been cutting the pay of their senior staff in recent months as part of a government "common prosperity" drive that includes austerity measures, but such steep cuts are rare in international firms operating in the country.

The belt-tightening at PwC underscores the challenges the Big Four auditing firm is facing as a result of its work for Evergrande, which was ordered to be liquidated in January after it defaulted on debt repayment obligations.

PwC, whose China business interests include auditing, consulting, and tax services, overall had 781 partners on the mainland as of last September, according to its website.

Reuters reported on Tuesday, citing sources, that PwC is considering slashing up to half its financial services auditing staff and about 20% of the staff in other auditing teams and non-auditing business lines in China.

PwC had been Evergrande's auditor for almost 14 years until early 2023.

A Reuters calculation based on filings showed more than 30 listed Chinese firms, many of which are state-owned enterprises or financial institutions, have dropped PwC as their auditor in recent months.

They include Bank of China and China Life Insurance, which last year paid accounting fees of nearly 200 million yuan and 64.2 million yuan, respectively, the filings showed.

PwC has built a substantial presence in China over the last couple of decades as domestic companies set their sights on listing at home and overseas and as the world's second-largest economy became more open to foreign investors.

Its main onshore arm PwC Zhong Tian LLP had revenues of 7.92 billion yuan ($1.1 billion) in 2022, making it China's top-earning auditor that year, official figures show.

($1 = 7.2578 Chinese yuan renminbi)