A new report points to the dominance of nationwide lenders in China when it comes to bank wealth management products.
The report from PY Standard (普益标准) indicates 439 commercial banks in China accounted for approximately 82,700 outstanding personal wealth management products (WMP’s) in 2018 worth a total of 23.54 trillion yuan.
According to the report as of the end of 2018 China’s 18 nationwide banks – comprised of the six big state-owned banks and 12 joint-stock banks, accounted for 27,100 outstanding personal (WMP’s) worth 18.52 trillion yuan, or 78.68% of the total amount.
Municipal commercial banks accounted for 30,000 personal WMP’s worth 3.81 trillion yuan, or 16.17% of the total, while for rural financial institutions – encompassing rural commercial banks, rural credit societies and rural credit unions, the 25,300 personal WMP’s they provided were worth 1.21 trillion yuan, accounting for 5.15% of the outstanding total.
PY Standard analyst Xu Min (涂敏) told Wallstreetcn.com that the launch of new asset management rules that removed the “implicit guarantees” for WMP’s had driven a rise in net value WMP’s and tip the balance in favour of larger lenders.
“Following the launch of new asset management rules, the Matthew effect has further intensified,” said Xu, in reference to the principle that the “rich get richer and the poor get poorer.”
“The top 100 banks in terms of scope account for 96% of market share, and this percentage os continually rising.”
Xu pointed out that net value WMP’s make greater demands of banks in terms of investment, research, operational and sales capabilities, to the benefit of more established and experienced lenders.
WMP’s have traditionally been favoured by smaller banks in China, however, as a means of competing against larger, better networked lenders for scarce retail funds under conditions of regulated deposit rates.