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The "China Banking Industry Financial Management Market Semi-Annual Report (2021-Part 1)" released by the Banking Industry Financial Management Registration and Custody Center on August 13, 2021, the semi-annual reports of various banks and a series of recent related policies have provided some support for us to discuss the latest situation of bank wealth management business.
Although the policy impact is obvious (for example, in recent years, interbank wealth management, guaranteed wealth management and short-term wealth management products, such as interbank wealth management, guaranteed wealth management and short-term wealth management products that are not encouraged by the policy are very high; cash management products that support half of the wealth management products on the funding side are also subject to policy-level norms; the sales side of wealth management products are relatively limited compared to public funds, etc.), bank wealth management and fund management have become the two major sub-industry in the large asset management industry since 2018 that can still maintain positive growth in scale since 2018. At the same time, the wealth management (retail wealth management accounts for a high proportion) and fund-based characteristics (high net value characteristics, high proportion of open-ended and public wealth management products) are becoming increasingly obvious.
1. Analysis basis: The financial management report has been released for a total of 13 issues, and the caliber and layout changes have been significantly since 2021
Overall, the financial management market report has been released for 13 issues since 2013 (one every six months, including no semi-annual reports were released in 2015, 2018 and 2020).
(I) Compared with other asset management industries, the data sources of banking financial management can basically rely on the annual reports of each bank, the official website of the China Banking and Insurance Regulatory Commission and the financial management market report. The overall situation is relatively limited and not transparent enough. Especially from a historical perspective, the semi-annual or annual report of financial management also presents problems such as unstable release time, short release pages, multiple adjustments to the classification caliber, low comparable value before and after, and weak guidance significance. However, it is gratifying that the financial management market reports released since 2021 are obviously richer in content.
(II) Since 2013, the content and scope of the financial management (semi) annual report have been adjusted many times. Specifically, in 2018, we will conduct special analysis on non-guaranteed financial management in accordance with the requirements of the new asset management regulations, and will no longer use the previous customer classification method (that is, it is not divided into personal finance, private bank wealth management, high-net-worth customer wealth management, etc.), but will be classified according to the public and private equity, open and closed, net value and non-net-worth, bank types, and underlying asset categories stipulated in the new asset management regulations.
(III) The 2020 annual report of the financial management market and the 2021 semi-annual report are basically the same in content, but the changes have been greatly compared with before 2020. From a style point of view, it should be borrowed from the Central Bank’s monetary policy implementation report.
2. Comprehensive analysis of the latest market situation of banking wealth management
(I) The position of banking wealth management in the large asset management industry: its proportion is stable at more than 20%
1. The latest data shows that if the insurance asset management industry is not considered, the scale of the entire large asset management industry is about 110 trillion. Among them, the total scale of the asset management industry under the CSRC's system (including public funds, private funds , securities asset management, special accounts, etc.) reached 63.73 trillion yuan, contributing 57.85% of the large asset management industry; the total scale of the asset management industry under the CSRC's system reached 56.44 trillion yuan, contributing 42.15% of the large asset management industry.
2. From the perspective of specific sub-industry, bank wealth management, public funds, trusts and private funds rank among the top, with management scales reaching 25.80 trillion, 23.03 trillion, 20.64 trillion and 18.90 trillion respectively as of the end of June this year, respectively, reaching a total of 88.37 trillion.
In fact, under the influence of new asset management regulations and other policies, asset management industries that violate the concept of new asset management regulations such as single trust plan, securities firm targeted asset management, and fund special account scale are in the process of scale compression. For example, securities asset management and special account businesses have been compressed from 17.58 trillion and 16.89 trillion at the end of 2016 to 8.34 trillion and 7.57 trillion in June 2021, respectively, and a total of 18.56 trillion were compressed. In addition, the trust plan also reduced by 5.61 trillion from 26.25 trillion at the end of 2017 to 20.64 trillion at the end of June 2021.
3. Although except for being surpassed by the trust industry during 2017 and 2018, bank non-guaranteed wealth management has always been the first in the large asset management industry. However, in recent years, the proportion of bank wealth management in the large asset management industry has remained stable between 23-25%, while the proportion of public funds and private funds in the large asset management industry has shown a significant increase, which has rapidly increased from 9.63% and 8.29% in 2016 to 20.90% and 17.16% at the end of June 2021, respectively.
4, the cumulative fundraising scale of bank wealth management in the first half of 2021 reached 62.41 trillion yuan (a year-on-year increase of 5.57%), and 124.56 trillion yuan (a year-on-year increase of 11.63%) were raised in 2020. This can to some extent show that the market demand for bank wealth management is still very large, and it is still a popular category of sub-industry in the large asset management industry. It also shows that residents' demand for wealth allocation is relatively strong.
(II) Remediation areas: Interbank wealth management, short-term products, guaranteed products and nested products pressure drop
1. Interbank wealth management products are about to be cleared, and the current balance has dropped to 0.27 trillion
As of June 2021, the balance of interbank wealth management products has dropped to 0.27 trillion , down 0.12 trillion , and the proportion of all non-guaranteed wealth management products has dropped to 1.05%, which is significantly lower than 5.99 trillion (historical high) at the end of 2016 (the cumulative pressure has dropped by 5.50 trillion ).
According to the data, the remaining balances of interbank wealth management products from 2015 to 2020 were 3 trillion, 5.99 trillion, 3.25 trillion, 1.22 trillion, 0.84 trillion and 0.39 trillion respectively. You should know that the balance of interbank wealth management products in June 2014 was only 514.851 billion yuan. Therefore, from the second half of 2014 to 2016, the net increase of interbank wealth management balance was 5.48 trillion yuan.
2. The remaining balance of closed products below 3 months (inclusive) may have dropped to zero
new asset management regulations and new financial management regulations both encourage the extension of the term of wealth management products to match the underlying assets. This is mainly because the extension of the term of closed products will help maintain the net value of financial products and break the rigid guarantee, avoiding the impact of large fluctuations in the financial market and frequent redemptions by customers. At the same time, the extension of the term of wealth management products will help wealth management companies allocate long-term assets and adopt more flexible and diverse investment strategies.
(1) The average term for newly issued closed-end wealth management products in 2018, 2019 and 2020 is 173 days, 198 days and 228 days respectively. The average term for closed-end wealth management products in the first half of this year was 281 days. It can be seen that the term shows the characteristics of gradually extending.
(2) The balance of closed-end products with a period of less than three months (inclusive) at the end of 2020 fell to 152.9 billion yuan, a year-on-year decrease of 63.67%, accounting for only 0.59% of the remaining balance of all financial products. In the first half of this year, the balance of closed-end products with a total of less than 3 months (inclusive) was not announced, so we speculate that it may have dropped to zero.
3. Guaranteed wealth management products are about to be cleared, and their current balance has dropped to 0.15 trillion
As of the end of June 2021, the remaining balance of guaranteed products has dropped to 0.15 trillion , a significant decrease of 1.46 trillion , a significant decrease of 12.50 trillion from the historical high of 12.65 trillion in 2014, and a decrease of 7.22 trillion from the 7.37 trillion regulations before the new asset management regulations (at the end of 2017). Therefore, there should be no big problem of clearing zero by the end of the year.
4. Nested asset management products fell by 2.53 trillion yuan compared with the previous new asset management regulations. However, the counter-trend growth in the first half of the year
de-channeling is policy-oriented, and the most important task is to reduce the scale of nested asset management products (FOF-type wealth management products that encourage investment in public funds at the policy level). However, considering that the proportion of financial products investing in public funds is increasing, there are some changes in the first half of the year.
As of the end of June 2021, the total scale of various asset management products held by wealth management products was 9.49 trillion yuan, a decrease of 21.02% from the previous release of the new asset management regulations, but a net increase of 0.56 trillion yuan from the end of 2020.The scale of nested investments rose against the trend in the first half of this year, which may be related to the increase in the proportion of financial products investing in public funds, namely FOF-type wealth management products. FOF-type wealth management products indirectly realize the allocation of equity assets through public funds. As of the end of June 2021, banks and wealth management companies had 153 FOF-type wealth management products, with a scale of 114.4 billion yuan (FOF-type products of wealth management companies accounted for 70.94% of all FOF-type products).
(III) Wealth management of wealth management products: Retail wealth management has become the main support force for bank wealth management
Although the scale data of wealth management customers' classification and continuous existence has not been disclosed since 2018 (the scale of individual, institutional exclusive and interbank financial management will be disclosed before), the conclusion that the status of retail financial management is gradually improving is supported (retail wealth management mainly includes general personal wealth management, high-net-worth customer wealth management, and private banking financial management), which means that bank wealth management is gradually showing the characteristics of wealth management.
1, the proportion of public financial management products increased to 95.71%
In addition to the continuous decline in the scale of interbank financial management, public financial management products (by product issuance method) mainly aimed at the retail side have maintained significant growth. For example, the remaining balances of public wealth management products in June 2019, December 2019, December 2020 and June 2021 were 21.08 trillion yuan, 22.33 trillion yuan, 24.75 trillion yuan and 24.63 trillion yuan, respectively, accounting for 95.04%, 95.43%, 95.71% and 95.93% of all non-guaranteed wealth management products, respectively, showing a trend of gradual improvement.
2. Affected by factors such as the reduction in sales starting point, the number of investors in wealth management products has increased significantly in the past year
After accepting the new financial regulations, the sales amount of wealth management products has decreased significantly. In recent years, the number of investors holding wealth management products has increased significantly, especially the number of individual investors driven by cash management products has increased significantly. As of the end of June 2021, the number of investors holding wealth management products reached 61.3773 million, an increase of 47.45% from the beginning of the year, and a significant increase of 137.71% year-on-year. It should be noted that the number of financial management investors in the same period of 2020 was only 25.82 million. Among them, the number of individual investors reached 61.1409 million, accounting for 99.61% of the total number of investors in financial products.
3. The scale of financial management held by retail investors is highly positively correlated with the regional economic development level
According to the information disclosed in the financial annual report, the top 5 regions in the total amount of financial management products held by retail investors are Zhejiang, Jiangsu, Shandong, Shanghai and Guangdong, which are generally significantly positively correlated with the economic development level. According to the latest data, in 2020, Zhejiang GDP was 6.46 trillion, Jiangsu 10.27 trillion, Shandong 7.31 trillion, Shanghai 3.87 trillion and Guangdong 11.08 trillion. This shows that there is a strong correlation between the total economic output of a region and the corresponding financial product scale.
4. More than 21% of investors hold more than 1 institutional financial management product, and the proportion of dispersion has increased
From the data, the concentration of investors' financial management assets has decreased compared with the end of 2020, and the proportion of dispersion has increased, that is, more and more investors tend to choose to invest in financial management products issued by more than one institution. Specifically, the proportion of investors who only holds 1 institution to issue wealth management products dropped from 80.87% at the end of 2020 to 78.69%, while the proportion of investors who holds 2 institution to issue wealth management products rose from 14.16% at the end of 2020 to 14.71%, while the proportion of investors who holds 3 or more institutions to issue wealth management products rose from 4.97% at the end of 2020 to 6.60%. This shows that more and more investors tend to diversify their investments, that is, the existing customers of other banks have room to compete for.
(IV) Financial management products are gradually funding: the proportion of open-ended and net-value wealth management continues to increase
New asset management regulations and new financial management regulations require asset management products to implement net value management to promote bank wealth management to break the rigid guarantee and return to the origin of asset management.From the issuance side, this orientation is relatively clear. In addition to retail financial management, the status of open financial management (by product operation model) and net value financial management (by income manifestation and valuation form) in bank financial management is also gradually increasing, while the proportion of closed financial products and non-net-value financial products is gradually decreasing.
As of the end of June 2021, the balance of open wealth management products reached 20.32 trillion yuan, an increase of 11.82% year-on-year, accounting for 78.74% of the remaining balance of all wealth management products; the balance of closed wealth management products was 5.48 trillion yuan, accounting for 21.26% of the remaining balance of all wealth management products.
(2) The remaining balance of net value wealth management products was 20.39 trillion yuan, accounting for 79.03% of the remaining balance of all wealth management products, an increase of 11.75 percentage points from the beginning of the year.
Therefore, it can be basically believed that the fund-based characteristics of bank wealth management are becoming more and more prominent.
(V) Investment side: The bond allocation ratio has increased to 67%, the credit bond allocation ratio has exceeded 50%
1, the proportion of fixed categories has gradually increased, the proportion of equity categories is low and stable, and the proportion of mixed categories has gradually decreased
According to the requirements of the new asset management regulations and the new financial management regulations, wealth management products are divided into fixed income categories, equity categories, commodity and financial derivative categories and mixed financial management products according to the nature of investment.
Currently, from the data perspective, it is showing the gradual increase in the proportion of fixed income wealth management products, the gradual decrease in the proportion of mixed wealth management products, and the relatively low and relatively stable proportion of equity products. For example, the proportion of fixed income wealth management products has gradually increased from 72.99% at the end of June 2019 to 78.06% at the end of 2019, 84.34% at the end of 2020, and 88.18% at the end of 2021.
(2) The proportion of mixed wealth management products has gradually dropped from 26.68% at the end of June 2019 to 21.59% at the end of 2019, 15.36% at the end of 2020 and 11.47% at the end of June 2021.
(3) Equity products have always accounted for around 0.30%, and were 0.34%, 0.30% and 0.33% respectively in 2019, the end of 2020 and the end of June 2021, with a slight decline.
2, the bond allocation ratio has increased significantly, and the credit bond allocation ratio has exceeded 50%
Currently, the asset investment of bank wealth management funds mainly includes bonds, non-standard debt rights, equity assets, lending interbanks and buy and sell , cash and bank deposits, public funds, equity assets, direct financial financing tools, QDII, new investable assets, financial derivatives and alternative assets, etc. Judging from the data, the allocation ratio of
(1) has increased year by year from 42.19% at the end of 2017 to 64.26% at the end of 2020 and 88.18% at the end of June 2021. Among them, among bond assets, the proportion of interest-rate bonds (local government bonds) has decreased, and the allocation ratio of credit bonds (including general financial bonds) has increased to more than 50%.
(2) Equity assets fell year by year from 9.92% at the end of 2018 to 4.75% at the end of 2020 and 4.08% at the end of June 2021. The allocation ratios of cash and bank deposits, distribution interbanks and buy-backs are 9.67% and 2.62% respectively.
(3) The allocation ratio of non-standard debt assets has dropped from 15.63% at the end of 2019 to 10.89% at the end of 2020 and 13.08% at the end of June 2021.
3, investment leverage ratio : basically stable at around 110%
new asset management regulations and supporting documents clarify that asset management products should set a liability ratio upper limit (total assets/net assets) and tiered leverage (priority/undergrading level), and require similar products to apply a unified liability ratio upper limit and prohibit financial institutions from pledging financing with the share of entrusted management of products.
Specifically, the leverage ratios of open-ended public offerings, closed-ended public offerings, tiered private offerings and other private equity asset management products shall not be higher than 140%, 200%, 140% and 200%, respectively, that is, the debt-to-asset ratios of the four types of asset management products shall not be higher than 2/7, 50%, 2/7 and 50%, respectively, and pledges of asset management products are prohibited.
Overall, the investment leverage ratio of wealth management products also showed a quarterly increase in the quarter. At the end of 2020, the leverage ratio of bank wealth management was 111%, and at the end of June 2021 it was 110.74%. However, since 2018, the leverage ratio of wealth management products has basically remained within the range of 108-115%. In comparison, the leverage ratio of wealth management companies is between 108-109%, even lower.
(VI) Breaking the rigid guarantee: "Breaking the net" problem frequently occurs, and increasing the net value fluctuation will be the norm
1. Affected by factors such as net value reduction, especially the sharp rise in bond yields from May to June 2020, the net value-based wealth management products issued by some banks and wealth management companies have experienced large net value fluctuations, or even falling below the initial net value, which has caused heated discussion in the market. According to the disclosure of the financial annual report and semi-annual report,
(1) Among the newly issued products in 2020, a total of 2,164 products have fallen below the initial net value, accounting for about 3% of the total number of products. At the end of 2020, 428 products were still lower than the initial net value (accounting for 0.60% of the total number of products issued that year).
(2) A total of 1,173 new financial products issued in the first half of 2021 have fallen below their net value, accounting for about 4.59% of the total number of new products. By the end of June 2021, there were still 139 products below the initial net value, among which the "net-breaking" products are mainly long-term and closed-end, while the allocation of assets is mostly based on the "fixed income +" strategy.
2. The market should realize that as the proportion of net value products using fair value pricing becomes higher and higher, the fluctuations in the underlying assets at the investment end will definitely be transmitted to the product end. Therefore, the large fluctuations in the financial market will inevitably lead to the increase in the fluctuation of the net value of wealth management products. In particular, strengthening investor education with "self-enjoy returns and bear risks", strengthening financial product information disclosure and risk disclosure, and doing a good job in investor suitability management are also the main purpose of breaking the rigid and guaranteeing the rigid and guaranteeing. Therefore, in the medium and long term, breaking the rigid and guaranteeing the rigid and guaranteeing is not just a slogan.
3. Financial management companies: 29 have been approved to build, with a scale of more than 10 trillion
Considering factors such as joint venture financial management companies and getting rid of bank shadows, the 2020 financial management market report officially replaced "wealth management subsidiaries" with "wealth management companies".
(I) 29 wealth management companies have been approved for establishment (17 national banks and 4 joint ventures)
Currently, a total of 29 wealth management companies have been approved for establishment, including 6 state-owned banks, 11 joint-stock banks (only Zhejiang Commercial Bank ), 7 city commercial banks, 1 rural commercial bank and 4 joint venture financial management companies. However, on November 26, 2020, Zhejiang Commercial Bank announced that it plans to invest 2 billion yuan to establish Zhejiang Bank Wealth Management in Hangzhou. At the same time, from the time distribution of the financial management companies approved for construction, 2 were approved for construction in 2018, 15 financial management companies were approved for construction in 2019, 7 were approved for construction in 2020, and 5 were approved for construction in 2021.
1, and 8 local banks have been approved for establishment. Among them, 6 of the top 7 major city commercial banks have been approved
Currently, 8 local banks' wealth management companies have been approved, including 7 city commercial banks and 1 rural commercial bank (i.e. Chongqing Rural Commercial Bank ). These seven city commercial banks are Hangzhou Bank , Ningbo Bank , Huishang Bank , Jiangsu Bank , Nanjing Bank , Qingdao Bank and Shanghai Bank .
It can be seen that among the top seven city commercial banks, only Beijing Bank 's financial management company has not been approved. At the same time, except for Qingdao Bank, the other six urban commercial banks approved to establish wealth management companies ranked 2-7th in urban commercial banks according to their total asset size, and are all located in , in the Yangtze River Delta region, and are relatively concentrated in regional distribution.
2 and 4 joint venture financial management companies have been approved, with registered locations in Beijing, Qingdao and Yangtze River Delta and other places
(1). Currently, four joint venture financial management companies have been approved, namely Huihua Financial Management (CCBT and Oriental Huili joint venture), BlackRock Construction Bank Financial Management (CCT and BlackRock financial joint venture), Schroder Bank of Communications (CCT and Schroder Investment Management joint venture) and Goldman Sachs ICBC Financial Management (CCT and Goldman Sachs Asset Management joint venture).
(2) From the distribution of the registered place: (1) Among the six state-owned banks, 4 are located in Beijing, 1 is located in Shenzhen (China Construction Bank Wealth Management), and 1 is located in Shanghai (Bank of Communications Wealth Management); (2) Two joint-stock banks are located in Beijing (Huaxia Wealth Management and Minsheng Wealth Management), three are located in Shanghai (Puyin Wealth Management and Xinyin Wealth Management and Guangyin Wealth Management), two are located in Shenzhen (China Merchants Bank Wealth Management and Ping An Wealth Management), one is located in Fuzhou (Xingyin Wealth Management), two are located in Qingdao (Everbright Wealth Management), and one is located in Tianjin (Boyin Wealth Management).
3. China Merchants Bank Wealth Management became the first wealth management company to introduce strategic investors
On March 19, 2021, China Merchants Bank issued an "Announcement on the Introduction of Strategic Investors to Increase Capital in China Merchants Bank Wealth Management Co., Ltd.", announcing that Morgan Asset Management's cash capital increase for China Merchants Bank Wealth Management (established on November 1, 2019, with a registered capital of 5 billion yuan) (the shareholding ratio reached 10%). After the introduction of strategic investors, China Merchants Bank Wealth Management will become the first financial management company to introduce strategic investors. Specifically, as follows:
(1) Morgan Asset Management invested approximately RMB 2.667 billion, of which 556 million was included in the registered capital of China Merchants Bank Wealth Management (the registered capital of China Merchants Bank Wealth Management increased to 5.556 billion), and the remaining approximately RMB 2.111 billion was included in the capital reserve of China Merchants Bank Wealth Management .
(2) After the capital increase is completed, China Merchants Bank and Morgan Asset Management hold 90% and 10% of China Merchants Bank Wealth Management respectively.
(3) JPMorgan Chase Group indirectly holds 100% of the equity of Morgan Asset Management (registered capital of HK$60 million). As of the end of 2020, the total assets were US$263 million, and revenue and net profit were US$385 million and US$15 million, respectively.
(II) The structural problem of "mother is biased against son is biased" is gradually reversing, and wealth management companies have jumped to the largest financial institution type
1. As of the end of June 2021, the scale of wealth management companies has reached 10.01 trillion yuan, accounting for 38.80% of the financial management market, which is relatively large. The growth rate of 0.80 trillion at the end of 2019 and 6.67 trillion at the end of 2020 was significantly higher, far exceeding the 6.95 trillion yuan of joint-stock banks, 3.92 trillion yuan of state-owned banks, 3.78 trillion yuan of urban commercial banks, and 1.05 trillion yuan of rural financial institutions. Therefore, according to the data, wealth management companies have become the largest institution type with the largest survival scale of products in the entire wealth management market. Considering that the survival scale of state-owned banks, joint-stock banks and urban commercial banks is gradually shifting to their wealth management companies, this means that the "mother is biased towards sons and less than sons" structure has been basically reversed.
2. Judging from the types of wealth management products of wealth management companies and banking institutions, although the common characteristics of the two are relatively obvious, there are some differences: (1) Compared with banking institutions, wealth management companies prefer FOF-type wealth management products. Among all FOF-type wealth management products in the financial market, wealth management companies contribute 70.94%; (2) Wealth management companies are relatively more inclined to fixed income products; (3) In terms of risk level, wealth management companies and banking institutions are mainly first, second and third levels, but the distribution of wealth management companies is relatively more balanced.
4. Commercial bank wealth management scale: obvious differentiation and high concentration
(I) Commercial banks (including non-listed): 28 companies have exceeded 100 billion yuan, 41 companies have exceeded 50 billion yuan
If some of the most ranked non-listed banks (replaced with their 2020 non-guaranteed wealth management scale data), they will find that there are currently 3 banks with a non-guaranteed wealth management scale of more than 2 trillion yuan, 9 banks with a non-guaranteed wealth management scale of more than 1 trillion yuan, 28 banks with a more than 100 billion yuan, 41 banks with a more than 50 billion yuan, and 59 banks with a more than 20 billion yuan. Among them, there are 9 banks with a scale of more than one trillion in non-guaranteed financial management, namely China Merchants Bank, ICBC , Agricultural Bank , CCB , CCB , Industrial Bank , Bank of China , Bank of China , CITIC Bank , Pudong Development Bank and Bank of Communications . Among them, the non-guaranteed financial management scale of China Merchants Bank, ICBC and Agricultural Bank of China exceeded 2 trillion yuan, 2.57 trillion yuan, 2.37 trillion yuan and 2.15 trillion yuan respectively.
2, the non-factoring scale of 19 banks is between 100 billion and 100 billion yuan, including 10 local banks including Shanghai Bank, Jiangsu Bank, Beijing Bank, Nanjing Bank, Hangzhou Bank, Ningbo Bank, Huishang Bank, Qingdao Bank, Chongqing Rural Commercial Bank and Shanghai Rural Commercial Bank .
3. In addition, the non-factoring scale of 13 banks exceeded 50 billion yuan, from high to low, namely Tianjin Bank , Guiyang Bank , Guangzhou Rural Commercial Bank , Zhongyuan Bank , Suzhou Bank , Qilu Bank , Hankou Bank , Chengdu Bank, Changsha Bank , Shengjing Bank , Harbin Bank , Guangzhou Bank and Chongqing Bank.
(II) The non-factory financial management scale has reached 50 billion yuan but has not yet been approved to establish a wealth management company. There are still 15 banks with
At present, the market has a consensus that the basic premise of establishing a wealth management company is that the scale of non-factory financial management exceeds 50 billion yuan. Considering that 25 banks' wealth management companies have been approved for establishment, it means that 15 banks have reached the threshold of 50 billion yuan and have not been approved for establishment of wealth management companies. These 15 banks are from high to low according to the scale of non-guaranteed wealth management from high to low: Bank of Beijing (331.770 billion yuan), Zhejiang Commercial Bank (242.559 billion yuan), Shanghai Rural Commercial Bank (136.108 billion yuan), Tianjin Bank (98.068 billion yuan), Guiyang Bank (83.986 billion yuan), Guangzhou Rural Commercial Bank (75.787 billion yuan), Zhongyuan Bank (74.195 billion yuan), Suzhou Bank (66.601 billion yuan), Qilu Bank (64.229 billion yuan), Hankou Bank (59.975 billion yuan), Chengdu Bank (57.723 billion yuan), Changsha Bank (54.853 billion yuan), Shengjing Bank (53.221 billion yuan), Harbin Bank (52.960 billion yuan), Guangzhou Bank (51.514 billion yuan), and Chongqing Bank (51.302 billion yuan).
(III) The probability of banks with a scale of less than 50 billion yuan being approved to establish a wealth management company is very low
1. Judging from the current situation, the possibility of banks with a scale of less than 50 billion yuan being approved to establish a wealth management company is basically 0. The main reasons are as follows:
(1) While the regulatory authorities are promoting commercial banks to establish wealth management companies, the supervision of traditional wealth management business of commercial banks will become increasingly strict. Especially after the transition period of the new asset management regulations, the compliance risks of wealth management business within the banking system will continue to increase, and subsequent commercial banks that have not established wealth management companies will also form a significant scissors gap effect. The latter's living space for wealth management business will be constantly squeezed until it dies.
(2) Judging from the banks that have established wealth management companies, the financial management business of the banking system is gradually shifting to its wealth management companies (some banks have even achieved complete transfers), and the financial management business within the banking system is in a stage of continuous shrinking. The pace of shrinking after the transition period of the new asset management regulations may further accelerate. This trend is expected to be an industry feature, not a case.
(3) The financial management business within the banking system is actually difficult to get rid of the shadow of banks, and the regulatory authorities seem to believe that only by conducting financial management business through financial management companies can we fundamentally standardize financial management business and break the shadow banking characteristics of traditional bank wealth management business. Therefore, the policy direction after the new asset management regulations is very clear, that is, continuously compressing wealth management business within the banking system and promoting wealth management companies to transform towards real asset management.
(4) It may be from the perspective of the financial management department, not all banks need to set up financial management companies, and not all banks need to carry out financial management business. For banks that cannot set up financial management companies independently, joint establishment or conducting agency sales through regional banks may be the future direction.
2. Therefore, for banks that cannot set up financial management companies due to scale restrictions and other factors, the future hope may lie in two main points, namely, vigorously conducting agency sales business (but this is only related to the retail department) and jointly establishing it with other banks in the region. Obviously, when self-operated wealth management business cannot support the development of the bank's own retail business and wealth management business, agency sales become a last resort and necessary choice, otherwise the retail business will be greatly affected. After all, the advanced stage of retail business is wealth management business and private banking business.
55. Discussion on the policy level of the banking financial management industry
On July 31, 2020, the People's Bank of China, together with the National Development and Reform Commission, the Ministry of Finance, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the Bureau of Foreign Exchange, House, decided to extend the transition period of the new asset management regulations to the end of 2021. Although there are less than four months left for the transition period of the new asset management regulations, the new asset management regulations clearly require rectification of interbank wealth management, guaranteed capital management, short-term wealth management and other fields that need to be rectified have been nearly completed. The proportion of net value wealth management has also increased to about 80%, and the pace of commercial bank wealth management to wealth management companies has significantly accelerated. It should be said that there is not much time left for bank wealth management, and bank wealth management will usher in a real big test in four months.
(I) Cash management financial management products that support bank wealth management are standardized in reference to money-based products
1. Cash management products have supported most of the increase in bank wealth management in recent years, and even 80% of the non-guaranteed wealth management of some banks are composed of cash management products. According to statistics from the financial management report, the remaining balance of cash management products in the first half of this year reached 7.78 trillion yuan (the number of surviving products reached 351), and the cumulative amount of fundraising in the first half of the year reached 33.97 trillion yuan, accounting for 54.53% of the total amount of fundraising for all financial management products, that is, the contribution of the cash management products to all financial management products to nearly 55%.
As of the end of June 2021, the balances of cash management wealth management products and money base were 7.78 trillion and 9.27 trillion respectively, an increase of 0.20 trillion and 1.22 trillion respectively from the end of 2020 (all non-guaranteed wealth management products decreased by -0.06 trillion). In 2020, cash management wealth management products and money-based products increased by 3.42 trillion yuan and 0.64 trillion yuan respectively (all non-guaranteed wealth management products increased by 2.46 trillion yuan).
2, but cash management financial products are the same essence as money-based products, and the same regulatory rules should be applied. On June 11, 2021, the China Banking and Insurance Regulatory Commission and the People's Bank of China jointly issued the "Notice on Standardizing the Management of Cash Management Wealth Management Products" (Bank and Insurance Regulatory Commission (2021) No. 20) (see the Manual for Money Fund and Cash Management Products (2021 Edition) for details), extending the transition period of cash management wealth management products to the end of 2022 (one more than the new asset management regulations), and at the same time, the regulatory standards for cash management products were strengthened with reference to money-based products. The release of Document No. 20 means that the regulatory framework for money funds (affiliated to the CSRC system) and cash management products (affiliated to the banking system) has been established. The two major products have basically achieved the unity of rules, and the regulatory rules for cash management products are basically completely referring to money funds.
(II) The "Interim Measures for the Management of Financial Management Products Sales of Financial Management Companies" regulates the sales of financial products
On May 27, 2021, the official website of the China Banking and Insurance Regulatory Commission issued the "Interim Measures for the Management of Financial Management Products Sales of Financial Management Companies" (see the comprehensive comparison of financial products and public fund sales for details). In the short term, sales institutions will be limited to financial companies and banking financial institutions that absorb public deposits (at the same time, it is clear that the scope of financial product sales institutions will be extended to other financial institutions and professional institutions in a timely manner). In addition, the measures clearly state that information should be fully disclosed to investors and risks should be disclosed, to prevent the disguised publicity of expected yields, to promote the transformation of net value, to strive to break the expectations of rigid guarantees, and to propose 18 prohibited matters, including the six important prohibitions as follows:
1. It shall not be promoted directly or in disguised, and promised to guarantee principal and profits.
2. Do not harm national interests, social public interests and the legitimate rights and interests of investors.
3. Prohibited use of performance benchmarks that do not specify the reasons for selection, basis for calculation or calculation method.
4. It is prohibited to use absolute values and interval values alone or prominently to display performance benchmarks.
5. It is prohibited to force bundling or selling other services or products during the sales of financial products.
6. It is prohibited to provide lottery, kickback, gifts of physical goods, financial rights and financial products to sell financial products.
(III) Valuation of wealth management products: amortized cost method, wealth management products are frustrated, and space is continuously squeezed
On January 19, 2021, the Bank of China Association held a review meeting on the final topics of two projects, "Practical Manual for Financial Product Accounting" and "Operational Guide for Financial Product Valuation", which means that these two documents will be released soon. However, the more important policy information is that on August 24, 2021, the China Banking and Insurance Regulatory Commission convened a meeting of six state-owned banks to deploy follow-up arrangements for amortized cost-based financial products (see the accelerated exit of non-net-value products, pseudo-net-value products are facing cleanup and rectification). At the same time, it is reported that the above regulations have been extended to joint-stock banks and city commercial banks. The orientation of
means that in the period of only four months after the transition period of the new asset management regulations (the end of 2021), the game between the market and policy departments is intensifying, and the policy level is focusing on promoting the transformation of net value into a sprint period. Non-net-value financial management products will accelerate their exit, and "pseudo-net-value" products will face cleaning up and rectification.
(IV) window guides banks to remove financial management transfer business
The launch of the financial management product transfer function is aimed at solving the liquidity problem of investors holding long-term financial management products. The bank plays the role of matchmaking in it. The transferor needs to sacrifice a certain income, and the transferee will receive certain income compensation accordingly. However, since the first quarter of 2021, regulatory authorities have begun to guide commercial banks to remove financial management and transfer business. I think the reasons are roughly as follows:
1. Most of the financial management products that carry out financial management transfer business are in rectification products. During the rectification process, the transfer of financial management products will cause unnecessary interference to the rectification.
2. There is uncertainty in the pricing of financial products when transfer. Generally speaking, if the investment target mainly uses market-based valuation assets, the pricing of financial products becomes very difficult.
3. The transferor and transferee of wealth management product have hidden dangers in investor suitability and risk disclosure.
4. Public funds themselves only have two types of subscription and redemption, and there is no business category like transfer. Therefore, referring to the direction of public funds' transformation, it seems that there is no basis for financial management products to have an additional transfer function.
(V) A brief discussion of the "Snowball Structured Financial Management Products" that have nothing to do with bank wealth management
1. Since March 2021, Snowball Structured Financial Management Products have been popular, but the market has a misunderstanding of Snowball Structured Financial Management Products. In fact, Snowball Structured Financial Management Products are neither financial products nor products under Snowball, but are obstacle put options issued by securities companies, or are understood as non-guaranteed income certificates issued by securities companies (i.e. equivalent to on-balance sheet liability products issued by securities companies). Therefore, snowball structured financial management products are actually not closely related to bank wealth management. Their name should be corrected as "snowball structured option product" and should not contain the word "financial management".
2. Here, a brief analysis of snowball structure option products is also conducted. Since August 2021, regulatory notices have issued documents requiring "securities to strengthen risk control of snowball products and remind the product of investors that there are risks such as investor sales appropriateness, securities companies inadequate hedging, and on-balance sheet losses." On August 31 this year, the China Securities Association even provided window guidance to asset management institutions such as securities companies, fund subsidiaries:
(1) The proportion of investment in snowball structure options for a single product does not exceed 25%, all of which are professional investors and a single investor exceeds 10 million can be exempted;
(2) Do a good job in investor suitability, and the product risk level must match the risk of snowball;
(3) Strengthen information disclosure and clarify the risks of product input in the contract. If the product is issued and entered during the operation, investors should be explained in special risks;
(4) It is not recommended that independent fund sales institutions sell snowball products on behalf of others;
(5) Starting from September, snow products that do not meet the requirements will not be registered, which will not affect the operation of existing products.
3. The main reasons why snowball products are easy to sell may be the following:
(1) Snowball products have set bidding (equal to or higher than a certain proportion of the price at the beginning of the period), opening price, and entering price (usually about 80% of the price at the beginning of the period). Only when the underlying asset price (the underlying assets linked to the snowball products are mainly CSI 500) do not fall below the knock-in price or even if it falls below the knock-in price and returns to the opening price during the observation period, investors can obtain corresponding returns. Therefore, when the target assets do not continue to fall sharply, Snowball products appear to have become risk-free fixed income assets.
(2) Under the background of the new asset management regulations, breaking the rigid guarantee has become a general direction, while expected returns are becoming increasingly scarce, and investors have a relatively large demand for products with relatively certain returns, and snowball structure products are produced with the trend.
(3) Snowball structure products have relatively high fixed coupons and relatively easy to be downplayed risk conditions, making it easy for account managers to advertise to investors, because this product design can easily make investors ignore risks.
(VI) According to the data, the transformation pressure of most banks in wealth management business is still relatively high
Although the transition period is less than four months left, according to the data released by major banks, except for a few banks that are faster in transformation, most banks are still under great pressure to transform their wealth management business, such as the proportion of net value is not high enough, the scale of non-standard asset investment, and the scale of wealth management within the banking system is still relatively large, which means that the transformation of bank wealth management business in the future is still a long road.
Specifically, the financial management scale of the banking system of ICBC, CITIC Bank, CCB, Agricultural Bank of China, Bank of China and Bank of Communications is still as high as 1.12 trillion, 1.11 trillion, 0.90 trillion, 0.57 trillion, 0.55 trillion and 0.42 trillion respectively, and the total is still as high as 4.68 trillion. For example, the proportion of non-standard debt investments in CCB and Agricultural Bank of China still accounted for as high as 34.66% and 33.40% respectively.
Source: Oscillary Macro
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