(Yicai Global) April 19 -- China Everbright and China Merchant Bank have received the green light to set up wealth management units, making them the country's first joint-stock banks to receive such approvals after the big five state banks.
China's banking and insurance regulator has officially given the go-ahead for Beijing-based Everbright to invest CNY5 billion (USD746 million) in the unit, according to a statement. China Merchants is yet to confirm how much it will sink into the subsidiary but media outlet 21st Century Business Herald reported that it had received the related approval also.
Many banks are putting in the groundwork for wealth management units as Chinese savers' demands for investment products are on the rise. The Industrial and Commercial Bank of China will offer the largest fund for wealth management at CNY16 billion followed by China Construction Bank at CNY15 billion. The Agricultural Bank of China, Bank of China and Bank of Communications are preparing units with funds worth CNY12 billion, CNY10 billion and CNY8 billion, respectively.
Everbright issued one-fifth more financial products last year at CNY5.85 trillion, according to its annual report, while the balance of the bank's financial products reached CNY1.24 trillion as of the end of 2018.
The approvals mean that other joint-stock commercial lenders are likely to receive similar licenses from regulators. These can be expected in the second half of the year, an analyst noted.
The process for setting up such subsidiaries takes place in two stages, namely, preparation and the start of operations. These units have six-months to prepare for their establishment after securing the green light from the China Banking and Insurance Regulatory Commission through.
The commercial banks, as the controlling shareholders, need to submit applications to CBIRC, with the outcome to be determined by a regulatory review.
Editor: William Clegg