English

By Yin Lei

China's asset management sector will see institutional transformations and innovative business models under the new asset management rules, said an annual industry report by the China Banking Association released on Wednesday.

These new rules, released at the end of April, were formulated to regulate the RMB 100 trillion worth of assets under management in China.

The new rules banned non-financial institutions from conducting asset management businesses and put restrictions on the investment targets of different asset management products.

Those of such products backed by a public offering can only target standardized debt assets and exchange-traded stocks, while others funded by certain qualified investors can aim at debt assets, various corporate shares, and beneficial interests.

The annual report believed these rules will encourage banks to seek the formation of new entities.

During their business expansion, banks may set up new subsidiaries dedicated to this field of business and adopt incentive mechanisms that are distinct from those in the traditional commercial banks, the report pointed out.

Business models will see changes too. Asset management products will see a shift away from being just an alternative to bank deposits with their interest rates decided by market supply and demand.

Asset management entities backed up by banks of different sizes and types will develop differentiated competitive edges, and thus avoid overlapping business activities.

The higher thresholds on qualified investors, as in the case of a private offering, will help nurture long-term customers and more institutional investors.

In 2017, China's banking sector maintained stable operations, as this annual report revealed.

Profit margin in this sector was rising rapidly during this period as financial regulations were tightened, with commercial banks obtaining a total net profit of RMB 1.75 trillion, up by six percent year-on-year.