Eleven Chinese banks will be allowed to run credit financing and asset management businesses on a trial basis, according to a report by 21st Century Business Herald.
The move will allow the banks to run their asset management business independently, rather than depending on brokerages, trust and fund management firms as intermediaries to link banks’ funds to their investment projects to get around government restrictions.
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According to the report, banks in the trial, which will be launched on 18 October 2013, were given limits ranging from CNY500 million (US$81.7 million) to CNY1 billion for their asset management businesses.
The 11 Chinese banks mentioned in the report include Industrial & Commercial Bank of China, China Construction Bank, Bank of Communications, China Merchants Bank, China Citic Bank, China Minsheng Bank, China Everbright Bank, Ping An Bank, Shanghai Pudong Development Bank, Industrial Bank and Bohai Bank.
The report said that debt financing instruments, which are backed by loans, could be traded on a special trading platform which could help transform banks’ non-standard assets into standard assets.
In March 2013, China’s Banking Regulatory Commission has set a cap on banks’ riskier non-standard wealth management products, in a move to curb expansion of the country’s fast-growing shadow banking sector.
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By GlobalDataAccording to the Chinese regulator’s new rule, non-standard wealth management products shouldn’t exceed either 35% of their total wealth management products or 4% of a bank’s total assets.
