Bank of China (BOC) is to become the first of the ‘big four’ state-owned banks to create a wealth management offering. The service will be provided through a wholly owned subsidiary called Bank of China Wealth Management Co., Ltd.
Chinese newspaper The Paper reported that BOC will plow 10 billion yuan ($1.44 billion) into the venture, which has not yet been launched.
Though details of BOC’s wealth management proposition have not yet been announced, it is understood that it will make wealth management products available to any individual investor meeting a certain wealth criteria.
The news comes after authorities in China released a draft law detailing an overhaul of the asset management industry on 19th October. Original guidelines meant state banks could not create wealth or asset management operations until 2020. Instead, the draft said these requirements were not mandatory and banks could integrate wealth management operations into an affiliated company.
Legal guidelines also said wealth managers could invest directly in stocks for the first time. Currently, investments are made through mutual funds, which are likely to lose out following the changes.
Following the deadline for public comments on the draft law on Sunday, the other big four banks – Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China – might also consider creating wealth management subsidiaries.
Any entry into the wealth management space from the big four will likely concern the 14 commercial Chinese banks that already have wealth management offerings.