CBRC issues new wealth management rules to ensure enhanced systemic stability
Launch of CRBC’s fresh regulations to address transparency and accountability of banks’ retail assets as well as a growing shadow banking industry. April 03, 2013 | Baron LaudermilkThe Chinese Banking Regulation Committee (CBRC) tightened wealth management rules last week in another round of detailed prescriptions on how to sell wealth management products (WMPs). The rules aim at cracking down on the pooling of WMP-linked assets at banks by imposing harsh restrictions on their lending to debt-ridden local governments and limiting client exposure to risky investment products. Given the current market situation of fixed and low interest rates on deposits, Chinese banks have directed a significant portion of their deposit generation into wealth management deposit products which give a higher yield. In fact, the majority of WMPs offered by banks today are merely deposits in disguise. The utilisation of these alternative deposits in non-accountable venues is what the CBRC is most concerned about. In October 2011, the CBRC issued rules to rein in banks’ off-balance-sheet lending that fuelled fear of excessive credit growth that could negatively impact the long-term stability of the country's financial system. In a directive marked “extra urgent”, the CBRC banned banks from moving their loans off their books by repacking them into investment products. Other measures that the CBRC implemented in 2011 were wide-ranging and extended to such matters as the classification of products and investors, disclosure requirements, sales and marketing practices, training and compliance programmes and documentation requirements. Assets under management continued to grow at an unprecedented rate in the industr... 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:ICBC, WMP, CBRC, Qian Xiaoyang, Shadow Banking, Private Banking ICBC, WMP, CBRC, Qian Xiaoyang, Shadow Banking, Private Banking
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