Chinese banks are offering fewer wealth-management products amid a decline in yields in May following implementation of a policy that aims to tighten regulation of the sector, Xinhua News reports.
The new regulation required that investment in nonstandard assets be no higher than 35% of a bank’s total outstanding wealth management products, or no more than 4% of the bank’s total assets at the end of the previous year.
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By contrast, at the end of 2012, 40% of all outstanding wealth management products, or CNY2.8 trillion ($456.27 billion), were invested in nonstandard assets, a China International Capital Corporation (CICC) report showed, according to the report.
According to a data compiled by Bankrate.com.cn, 2,439 wealth management products were issued in April, a 12.8% fall compared to the figure in March, In the first week of May, 35 banks issued 282 products, compared to the 400 sold in the previous week.
More Chinese investors had considered wealth management products to seek higher returns, according to Xinhua News, which have a 1% margin compared to bank deposits. However, problems came with higher yield – a Huaxia Bank product failed to pay its return last year, and another by CITIC Trust is delaying payment, the report added.
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