China's efforts to tighten oversight of its $20trn-plus wealth management industry are spurring foreign banks to speed up plans to enter the local market or expand there, Reuters reports, citing six people involved in the discussions.
China's wealth management industry is the fastest-growing in the world but has historically been linked to the sale of high-risk, illiquid products and lax regulatory oversight.
Recently, however, officials have begun forcing domestic banks to separate their wealth-management businesses, a move sources said was aimed at improving governance as part of Beijing's broader push to reduce debt and limit the sale of risky products.
China has long been considered the Wild West by the foreign private banks"
Of that, only 5%, or $1.1trn, was invested offshore in 2017, according to Oliver Wyman.
"China has long been considered the Wild West by the foreign private banks," said an executive at a leading wealth manager in China, who did not want to be named. "With the market moving towards more regulated environment, onshore business is going to be the most important pie."
The private banking units of top Chinese commercial banks, including China Merchants Bank, Industrial and Commercial Bank of China , and Bank of China, dominate the local market, according to Asian Private Banker.
China's five major banks have so far gotten the regulatory nod to set up wealth management units, the China Banking and Insurance Regulatory Commission (CBIRC) said last month.