China Construction Bank Becomes Second Big Four Lender to Launch Wealth Management Subsidiary

China Construction Bank (CCB)  has joined the ranks of Chinese lenders with plans to establish their own wealth management subsidiaries.

On 16 November CCB issued a public announcement stating that it would establish Jianxin Licai Co., Ltd. (建信理财有限责任公司) with registered capital of no more than 15 billion yuan as a fully  owned subsidiary.

According to the announcement Jianxin Licai’s business scope will include the sale of wealth  management products to the public, the investment and management of entrusted assets, the private issuance of wealth management products to qualified investors and wealth management advisory and consultation services.

CCB is the second big-four state-owned bank in China to unveil plans to establish a wealth management subsidiary after Bank of China made a similar announcement last week.

CCB said the wealth management subsidiary would create effective risk separation from the bank, and be of benefit to expediting the professionalisation, marketisation and international development of wealth management operations, as well as expanding the vigour of support for high-quality state owned enterprises and private enterprises in China.

The draft version of the “Commercial Bank Wealth Management Operations Supervisory Administrative Measures” (商业银行理财业务监督管理办法(征求意见稿))  from 20 July of this year stipulated that “commercial banks shall undertake wealth management operations via subsidiary companies that possess independent legal person status.”

The Measures further stipulate that “commercial banks that undertake wealth management operations shall ensure that wealth management operations and other operations are separated, that wealth management product and other financial products that are sold on an agency basis are separated, and wealth management products are separated from each other.”

A total of 14 Chinese banks have announced plans to establish their own wealth management subsidiaries, including China Merchants Bank, Huaxia Bank, Bank of Beijing, Bank of Ningbo, Bank of Communications, China Everbright Bank, Ping An Bank, Bank of Nanjing, China Minsheng Bank, Industrial Bank Co.,, Shanghai Pudong Development Bank, Bank of Hangzhou and Bank of China.

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