China will look into wealth management products in 2013 by launching a closer scrutiny around money flows off banks’ balance sheets, reports Reuters.
China plans to scrutiny wealth management products with the aim of reducing financial risks at a time when growth is slowing in the world’s economy. The China Banking Regulatory Commission (CBRC) also said it remained committed to cutting risks from loans to local government financing vehicles.
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Market concerns and regulators’ warnings over risks in China’s fast-growing wealth management sector came to a head late last year after one instrument sold through Hua Xia Bank failed to pay its annualised return, and China’s CITIC Trust announced a payment delay on one of its products.
Almost 40% of loans to LGFVs will come due by 2016 and the outstanding amount of local government debt was estimated at CNY10.7 trillion by the end of 2010.
CBRC Chairman Shang Fulin has previously warned that a fresh spending push this year by local authorities will make it even harder for banks to limit their new lending to LGFVs.
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