New rules curb risky Chinese bank products

Regulations issued earlier this year succeeded in suppressing sales of a type of risky Chinese bank product in April and will threaten bank profits as a result, The Wall Street Journal reported. Banks issued 8.8% fewer wealth management products (WMPs) – high-risk, high-yield investment vehicles – in April compared to March, according to Chinese research firm Cnbenefit. Yields also declined to 4.3% in March from 4.4% in May, on average. The issuance of WMPs, which allow banks to earn higher profits than traditional deposits, has exploded from virtually nothing a few years ago to US$1.2 trillion at the end of 2012.