BEIJING Jan 14 Chinese banks must control their
wealth management businesses and reduce risk by not selling
unauthorized products or misleading customers, the bank
regulator said on Monday, a month after a publicized failure of
one wealth product.
The China Banking Regulatory Commission said banks would
also be barred from selling private equity funds, and that it
would monitor investment channels of trust loans and other
financial products to minimize risk.
"We will strictly control related risks from banks'
off-balance-sheet operations and monitor the design, sales and
investment of wealth management products," the regulator said in
an online summary of 2013 work priorities.
China's fast-growing wealth management sector made a stir
last month after one wealth product sold through Hua Xia Bank
failed to pay its annualized return on the given
That prompted some analysts to worry about a crisis of
confidence in the event of more and bigger defaults. China
estimated the amount of outstanding wealth management products
distributed through banks to be worth 6.7 trillion yuan at the
end of September, or 7 percent of the country's 91.7 trillion
yuan deposit base at the end of December.
The wealth industry has drawn concern in China because some
of its products funnel money into more credit risky businesses
such as property development that cannot get loans from banks.
The bank regulator also told banks to follow Beijing's
orders to calm property prices by not lending to those with more
than two homes. But at the same time, it told banks to
stress-test property loans to reduce risk from any cooldown.
($1 = 6.2 yuan)
(Reporting by Aileen Wang and Koh Gui Qing; Editing by Nick