Welcome to China’s wealth management industry. One bank offers a “Blooming sunflower” investment plan with an annualised return of 4.6 per cent. Sounds OK; only it matures in 45 days and up to two-thirds could be invested in a bundle of illiquid assets from trust loans to letters of credit with a mismatch of maturities. They could even be invested in servicing other maturing products. Investors cannot know for sure. No wonder the new administration is keen to bring the industry under control.
Last week the banking regulator announced rules capping wealth management products’ exposure to illiquid assets at 35 per cent, or 4 per cent of the offering bank’s total assets, whichever is lower. It also called for individual audits for each product issued.
Assets under management in wealth management products hit Rmb8tn ($1.3tn) last year, up two-thirds from 2011. These products were initially encouraged by regulators to support the deregulation of interest rates by offering competition to low-yielding deposits. But abuse quickly prevailed, prompting banks to book such products as deposits to meet loan-to-deposit ratios in order to carry on lending. Joint stock groups such as China Merchants Bank and Ping An Bank are particularly exposed to the rules, compared with bigger peers such as ICBC, given their large proportion of wealth management products to total assets.
Without limits on the sector, big defaults could risk contagion, which would prompt a liquidity crisis as investors flee. Sure, tightening the sector will lead to slower investment growth and boost bad debts in the short term. The insurance and securities regulators are certain to follow with their own rules to stop the industry shifting from banks to insurers and brokers. But the last thing China needs right now is its own subprime crisis.
去年，中国理财产品管理的资产规模达到8万亿元人民币（合1.3万亿美元），较2011年增长三分之二。这些产品最初因对低收益储蓄构成竞争、有助于放松利率管制，而得到监管部门的鼓励。但不久之后大量滥用现象出现，银行纷纷将此类产品登记为存款，以满足放贷所要求的贷存比率。比起中国工商银行(ICBC)等规模较大的银行，招商银行(CMB)和平安银行(Ping An Bank)等股份制银行由于理财产品占总资产比例较高，因而尤其受到新规影响。