The Industrial and Commercial Bank of China (ICBC), the country's biggest lender, has received approval to set up a wealth management subsidiary, according to a recent announcement from the top banking and insurance regulator.
The China Banking and Insurance Regulatory Commission (CBIRC) said that it has approved ICBC's application to establish a wealth management unit on February 15.
ICBC is reported to contribute no more than 16bn yuan ($2.37bn) of its own capital into the wholly-owned subsidiary, and the company will conduct business ranging from issuing wealth management products to the public to offering financial advisory services.
With this decision, now all of the top five state-owned commercial lenders have received the green light from the CBIRC to establish wealth management units. They include Bank of Communications, Agricultural Bank of China, Construction Bank of China and Bank of China.
The watchdog also said that it received applications from other commercial banks but did not reveal details. Industry insiders predict that the green light will soon be given to the Postal Savings Bank of China, China's sixth-largest bank, and joint-stock commercial lenders to set up such standalone wealth management units, according to local news outlet Shine.
In December, China issued rules for commercial banks' wealth management subsidiaries to strengthen their risk management and support the real economy. The move was aimed at improving banks' risk management capabilities. Earlier, banks had to rely on a mutual fund partner to sell wealth management offerings.