China’s Banking Regulator Hails Complete Removal of Guaranteed Principal and Non-compliant Wealth Management Products in 2021


The China Banking and Insurance Regulatory Commission (CBIRC) has hailed the success of efforts to wring out moral hazard in relation to bank wealth management products (WMP), following the release of sweeping asset management regulations in 2018.

Cao Yu (曹宇), CBIRC deputy-chair, said that the launch of the regulations had succeeded in ensuring that the asset management operations of banks and insurers had “returned to their original purpose, seen structural optimisation, and increase quality and efficiency.”

“The transitional period for reform of operations has concluded, and the banking and insurance sectors had basically completed rectification tasks for the transitional period at the end of 2021, satisfying overall expectations,” said Dao at a press conference held on 15 January.

“As of the end of 2021, we achieved complete removal of principal-guaranteed WMP’s and non-compliant short-term WMP’s, and the majority of banks had completed rectification tasks for outstanding WMP’s on schedule.

“Small and medium-sized banks in particular completed rectification work on schedule, setting firm foundations for the healthy development of bank wealth management operations.

“Insurance asset management products have basically made the transition to net-value conversion.”

Cao said that the reforms had achieved “large-scale increase in the quality and effectiveness of service for the real economy.”

“As of the end of November 2021, the asset management products of banking and insurance institutions had directly allocated nearly 40 trillion yuan in funds to the real economy, accounting for 13% of outstanding total social financing for the period,” he said.

“Wealth management, insurance asset management and trust funds made use of direct and indirect methods to invest over 27 trillion yuan in stocks and bonds, providing a long-term, stable source of funds for the capital market.”