Chinese banks offer more conservative products to gain edge in wealth management business
Chinese banks seek to leverage on low-risk WMPs that offer steady but lower returns to attract HNWIs looking for a safe haven in China’s slowing economy. October 09, 2012 | Baron LaudermilkWealth management products (WMPs) offered by Chinese banks are made up of investment instruments with short maturity periods, usually sold as low-risk vehicles offering returns that are higher than savings deposits. The products gain in value from various assets, some of which are linked to high-risk trust loans, in which banks play the middle-man between the trust company and the investor. However, Chinese banks these days are also offering less risky WMPs with lower yields as high-net-worth individuals (HNWIs) seek a safe haven to grow their wealth as the Chinese economic slowdown coincides with stagnation in the West. Despite China’s economic slowdown, investors are still investing in WMPs Figure 1: Total value of new WMPs issued
For example, Shanghai Pudong Development Bank (SPDB) now has a range of less-volatile WMPs on offer, to attract HNWIs with lower-risk appetites. Tang Jiahui, wealth management general manager at SPDB, said that the bank has introduced more conservative products to ensure steady growth and mitigate risk. The bank launched a variety of measures in 2010 to ensure that customers understood the products on offer and could assess risks and opportunities involved. Some of such measures include the bank’s wealth management officers suggesting that clients take a ten-question survey to evaluate their risk appetite. Customers are then advised on the kinds of products that would best suit their tastes. According to Jiahui, these measures have helped HNWIs understand how much risk they are willing to take, and surprising, many of these HNWI are now looking for investments that are more secure. “Despite Chinese HNWIs’ tendency to seek a quick gain, SPDB is attracting more conservative investors who are looking for safer bets with a long-term strategy in mind. While the bank may lose out on am... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: China, Retail Banking, Wealth ManagementChina,retail,Wealth Management, China,Retail Banking,Wealth Management, Keywords:HNWI, SPDB, China Merchants Bank, ICBC, Tang Jiahui, China Merchants Bank, Wang Jing, BoC, Ferdinand Jonkman, Bank Of Beijing HNWI, SPDB, China Merchants Bank, ICBC, Tang Jiahui, China Merchants Bank, Wang Jing, BoC, Ferdinand Jonkman, Bank of Beijing
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