Chinese Banks Deny Calling for Asset Management Curbs to be Dialled Down

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The peak industry for China’s banking sector has denied reports that it called for the country’s central bank to moderate new guidelines designed to curb their asset management operations.

Reports emerged last week that executives from ten joint-stock banks met with the People’s Bank of China to express their concerns about new regulations that will place heavy restrictions on the country’s $15 trillion asset management sector.

The banks reportedly criticised the regulations on the grounds that that they would undermine financial stability, as well as severely hamper smaller lenders who are dependent upon wealth management products to access retail funds.

A document also began to circulate within China last Thursday, that would appear to be a submission paper from the ten commercial banks requesting that the regulations to be dialled down considerably.

The ten banks mentioned in the document include China Citic Bank, China Guangfa Bank, China Zheshang Bank, Everbright Bank, Huaxia Bank, Industrial Bank, Minsheng Bank, Ping An and Shanghai Pudong Development Bank.

The China Banking Association has since used its Weibo account to announce last Friday that “there is no such thing as a joint submission by 10 commercial banks,” while banking executives told Caixin that the document is not an accurate reflection of their requests as expressed at meeting.

According to the document the banks have requested that the transition period for compliance with the new regulations be extended.

The document also proposes that restrictions on investment in non-standard assets be lightened, and the ceiling on the number of investors permitted to take stakes in privately offered funds be increased from the current level of 200.

Bloomberg News has reported that Chinese regulators are mulling an extension on the compliance transition period to the end of 2020, from June 2019 as outlined by the current draft guidelines.

Chinese regulators have also publicly sought to assuage concerns about the regulations by stating that they will give greater consideration to their potential impacts prior to implementation.

“The new regulations will fully consider the impact on banks and markets before being finalised,” said Liu Zhiqing, deputy director general of CBRC’s prudential regulation bureau, according to the state-owned Xinhua News Agency.

“We are seeking comments now, hoping all parties will make suggestions and come up with good solutions that will be implemented smoothly.”

Observers such as Issaku Harada and Yusho Cho of the Nikkei Review argue that the guidelines may never be enforced at all, should regulators become genuinely concerned about their adverse impacts upon China’s financial system.

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