Banks told to register all wealth products

Domestic banks are required to register all wealth management products they have sold since 2011 on a new centralized electronic system developed by the country's top banking regulator in Beijing to improve filing and tracking of the business.

All banks have been ordered to complete the registration for all products sold and distributed to individual investors before the end of this month, according to a notice issued by the China Banking Regulatory Commission in late June.

The registration will be expanded to include financial products sold to institutional investors in future, but no timetable was given in the notice, a bank source told Shanghai Daily yesterday.

Shanghai-based banks were previously required to file reports on new wealth management products with the CBRC Shanghai Office via documentation and a local electronic system that is similar to the new one.

At this stage, banks in Shanghai are required to report to both Shanghai and Beijing regulators on their wealth management business, said the source.

The CBRC's Shanghai Office was not available for comments yesterday.

Tracking system

New requirements for Beijing's tracking system include clarifications on products with regard to asset allocation, pricing and accounting methods, and management mechanism, according to the source.

Wealth management products are short-term investment vehicles sold by banks, offering rates above traditional deposits. Banks are reliant on these instruments to lure savings to meet the monthly regulatory target called the loan-to-deposit ratio, a measure of deposits held by banks in terms of loans they extended during a certain period.

Banking regulators have tightened monitoring over the sale of wealth products after a few default cases last year raised public concerns over management transparency of the vehicles.

Outstanding wealth management products in China rose by 500 billion yuan (US$80.8 billion) to 13 trillion yuan in the first five months, accounting for 16 percent of total deposits, according to Fitch Ratings' latest report.