The Bank of China and China Construction Bank – two of China’s ‘Big 4’ state lenders – have been given the green light by financial regulators to establish wealth management units, Caixin reports, signalling a softer stance from Beijing towards its $4.4 trillion wealth management product (WMP) industry.
Earlier this month, the China Banking and Insurance Regulatory Commission published new rules on how commercial banks can conduct their asset management businesses. Subsidiaries are now allowed to raise public stock funds and invest up to 35% of total assets under management in nonstandard credit assets, according to the CBIRC.
The government previously cracked down on WMP funds going towards such shadow banking activity, but a sharp slowdown in credit availability for smaller private firms has pushed Beijing to ease back curbing measures.
As many as 20 other banks, including the other two of the ‘Big 4’, are preparing to set up their own units, according to Caixin. Once approved, banks will have six months to create their units, with only three months of possible extension, the new rules state.