China | China to monitor banks' wealth management products
The yuan has fallen 6.1% against the US dollar so far this year. Photo: Reuters/Kim Kyung-Hoon
The yuan has fallen 6.1% against the US dollar so far this year. Photo: Reuters/Kim Kyung-Hoon

China to monitor banks’ wealth management products

New supervisory tool provides a comprehensive risk and credit exposure review for individual banks

October 26, 2016 6:53 PM (UTC+8)

The People’s Bank of China is tightening its monitoring of the banking sector’s off-balance sheet activities by including wealth management products in its newly formed “macro-prudential assessment” framework, the 21st Century Business Herald reports.

Dubbed MPA, the new supervisory tool provides a comprehensive risk and credit exposure review for individual banks.

The inclusion of wealth management funds off the balance sheet expands the existing coverage of total credit, which involves lending, bond investment, equity and other investment, buyback of financial assets, and savings with non-depository lending institutions.

“The fourth quarter is the observation period. The regulation will be officially launched in the first quarter of next year,” an unnamed source from the asset management department of a bank in Jiangsu was reported as telling 21st Century Business.

It is expected to have a large impact on the scale of off-balance sheet wealth management products, the source said, as it will mean taking assets off balance sheets to get around regulations.

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