Regional lender China Zheshang Bank hopes to join the ranks of Chinese banks that operate their own wealth management subsidiaries.
CZ Bank announced on 27 November that it planned to contribute 2 billion yuan (USD$304 million 0in capital to the establishment of its own fully owned wealth management subsidiary – CZ Bank Wealth Management Co., Ltd. (浙银理财有限责任公司) in the Zhejiang province capital of Hangzhou.
“The establishment of a wealth management subsidiary, standardisation of wealth management operations and the separation of wealth management operational risk is of benefit to increasing the overall financial services level of CZ Bank and strengthening its ability to service the real economy,” said a CZ Bank executive.
“The source of funds for this investment will be our own funds, and the investment will see the bank fulfil the latest regulatory requirements.”
CZ Bank’s 2019 annual report indicates that its interbank wealth management funds had fallen to almost zero, while its personal wealth management balance stood at 307.764 billion yuan at the end of 2019, for an increase of 2.67% since the start of the year, and accounting for 93.13% of the full bank wealth management balance.
CZ Bank is reportedly the 36th bank in China to unveil plans to establish a wealth management subsidiary, prompted by the launch of asset management regulations in early 2018 that forced lenders to remove the “implicit guarantees” on wealth management products.
23 wealth management subsidiaries in China have obtained approval for establishment – including 2 Sino-foreign joint ventures, while 21 wealth management subsidiaries have actually commenced operation.
Industry observers say that the establishment of wealth management subsidiaries creates even greater space on the bank WMP market in China, and is of benefit to making the products more inclusive and accessible to ordinary investors.