ICBC, China Construction Bank Grab Approval for Wealth Management Subsidiaries to Operate

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Two of China’s leading state-owned lender have obtained approval from the banking regulator for their wealth management subsidiaries to commence operation.

On 22 May the China Banking and Insurance Regulatory Commission (CBIRC) gave its approval to the launch of operations by ICBC’s ICBC Wealth Management Co., Ltd. (工银理财有限责任公司) and China Construction Bank’s Jianxin Wealth Management Co., Ltd. (建信理财有限责任公司开业).

CBIRC said that the commencement of operations by bank wealth management subsidiaries would further diversify the ranks of institutional investors, expand the supply of financial products, and provide a greater increase in funds for the real economy and financial markets, helping to better satisfy the diversified financial needs of consumers.

The “Commercial Bank Wealth Management Subsidiary Administrative Measures” (商业银行理财子公司管理办法) stipulate that the creation of wealth management subsidiaries by Chinese banks will be divided into two phases – preparation for establishment and operation.

CBIRC has stipulated that the preparation for establishment period is six months from the date that approval is given, with commercial banks subsequently submitting an operations application as controlling shareholders.

The operations application review period will be for a maximum of two months, with bank wealth management subsidiaries permitted to perform industrial and commercial registration and obtain operating licenses after receiving their operations approval documents and financial operating licenses.

In addition to ICBC and CCB five other banks have obtained approval to prepare to establish their own wealth management subsidiaries, including Agricultural Bank of China, Bank of China, Bank of Communications, China Everbright Bank and China Merchants Bank.

While ICBC was the last of the big five banks to obtain approval for preparation to establish a wealth management subsidiary, it’s become one of the first to garner the greenlight for the start of operations.

CCB and Bank of China were the first to obtain approval for preparation to establish wealth management subsidiaries on 26 December 2018, followed by Agricultural Bank of China and Bank of Communications on 4 January 2019, ICBC on 15 February 2019, and China Everbright Bank and China Merchants Bank on 18 and 19 April 2019 respectively.

Chinese banks approved to establish wealth management subsidiaries

Bank Category Registered capital Date of approval of establishment Date of approval of operations
Bank of Communications State-owned bank No more than 8 billion yuan January 2019  
Bank of China State-owned bank No more than 10 billion yuan December 2018  
China Construction Bank State-owned bank No more than 15 billion yuan December 2018 May 2019
Industrial and Commercial Bank of China State-owned bank No more than 16 billion yuan February 2019 May 2019
Agricultural Bank of China State-owned bank No more than 12 billion yuan January 2019  
China Merchants Bank Joint-stock bank 5 billion yuan April 2019  
China Everbright Bank Joint-stock bank No more than 5 billion yuan April 2019  

According to domestic media reports there are at least 31 commercial banks in China that have released plans for the establishment of their own wealth management subsidiaries, including municipal commercial banks and agricultural commercial banks in addition to the big state-owned banks and nationwide joint-stock banks.

Speaking at the recent China Wealth Management 50 Forum (中国财富管理50人论坛), CBIRC vice-chair Cao Yu (曹宇) said that regulation of wealth management operations will be implemented on a diversified basis depending upon actual conditions.

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