China has given its approval to preparations to establish the first wealth management subsidiary of a rural commercial bank.
Chongqing Rural Commercial Bank (渝农商行) (CRCB) announced on 19 February that it had recently obtained approval from the China Banking and Insurance Regulatory Commission (CBIRC) for preparations to establish Chongqing Rural Commercial Wealth Management Co., Ltd. (农商理财有限责任公司).
The subsidiary will have registered capital of 2 billion yuan, and be a fully invested of CRCB headquartered in Chongqing municipality.
“The establishment of Chongqing Rural Commercial Wealth Management will be of benefit to the creation of a specialist wealth management team, achieving upgrades in wealth management operations, expanding room for profitability and driving overall operations development,” said CRCB.
“It will have a positive impact on future development, and this investment will not have a material impact upon capital adequacy ratios or other financial indices.”
Chinese regulators have currently give their approval to 18 banks to make preparations to establish wealth management subsidiaries, including all six of China’s big state-owned banks, five joint-stock banks, six municipal commercial banks and one rural commercial bank.
Of these banks 11 have commenced operation of their wealth management subsidiaries.
CRCB is China’s largest rural commercial bank, with assets of 1.034192 trillion yuan as of the end of September 2019.
As of June 2019 CRCB had a wealth management product balance of 133.939 billion yuan, for an increase of 7.06% compared to the end of 2018.
The non-principal guaranteed wealth management product balance was 126.943 billion yuan.
Shunde Rural Commercial Bank (顺德农商行) commenced preparations for the establishment of a wealth management subsidiary at the end of 2018, but has not yet officially submitted an application regulators.
On 1 February CBIRC deputy-chair Cao Yu (曹宇) said in an interview that it would prioritise approvals for banks whose total assets and non-principal guaranteed wealth management operations had reached a certain scale.
CRCB is the second bank to have garnered approval for the establishment of a wealth management subsidiary since Cao Yu made his remarks, after the regulator gave the greenlight to Bank of Qingdao.