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Over Half of Bank Wealth Management Products Shift to Net Value Model Since Launch of 2018 Asset Management Rules

The launch of new asset management rules in February 2018 has led to a major shake up for wealth management products (WMP’s) issued by Chinese banks.

Data from PY Standard indicates that 309 Chinese banks issued 6593 bank WMP’s in the month of August, including closed expected return WMP’s, open expected return WMP’s and net value WMP’s.

The average return for closed expected return WMP’s was 3.75%, for a decline of 0.03 percentage points compared to the previous month, tapping a 45-month low.

Research conducted by PY Standard in conjunction with the China Banking Association (CBA) also points to a major shift in the composition of bank WMP’s over the past two-and-a-half years, moving in favour of net-value products.

As of the end of June the bank WMP balance was 22.1 trillion yuan, maintaining overall stability for the past three years.

Net value WMP’s totalled 13.2 trillion yuan, however, for a YoY rise of 67%, to account for 53% of the outstanding WMP balance.

New asset management regulations launched in February 2018 led to a major shake-up for bank WMP’s, by removing the “implicit guarantees” on the instruments that were widely used by smaller lenders to attract funds from depositors.

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