Funds from financial products rise
Print Edition
BANKS on China’s mainland raised 38 percent more funds from wealth-management products last year from a year earlier, while regulators unveiled more measures to tighten the shadow banking system.
The banks sold 68 trillion yuan (US$11 trillion) of wealth-management products last year, the China Banking Association said in a report yesterday. By the end of December, there was an outstanding amount of 10.2 trillion yuan on products that have not matured, the report said.
Over 70 percent of the funds, or above 47.6 trillion yuan, were invested in the real economy — manufacturing and services that create actual value — which makes the financial product an important channel for business funding.
Non-interest income at banks contributed 22.5 percent to total banking revenue last year, up from 19.5 percent in 2012. The income was driven by fees from selling wealth-management products, said the report.
Financial regulators have issued measures since last year to curb the fast expanding wealth-management business because of the risks it imposed on the entire financial system due to the opaque nature.
The new rules limit banks to investing in non-standard assets. These are debt-financing instruments that are not traded on either the stock exchanges or the interbank market. They include trust loans, acceptance bills, letters of credit, accounts receivables and equity financing under repurchase agreements.
The report said 31 percent of the money raised from the products was channeled into non-standard assets last year.
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