Lead­ing fi­nance com­pa­nies to fa­vor off-bal­ance-sheet as­sets

China Daily (Canada) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

The coun­try’s main fi­nance houses are likely to fo­cus on grow­ing off-bal­ance-sheet as­sets and in­creas­ing asset man­age­ment ac­tiv­i­ties, ac­cord­ing to a re­port as­sess­ing China’s asset man­age­ment mar­ket.

Jointly re­leased by China Ever­bright Bank Co Ltd and The Bos­ton Con­sult­ing Group on Wed­nes­day, the study sug­gested the na­tional asset man­age­ment mar­ket will grow by 87 per­cent to 174 tril­lion yuan ($27 tril­lion) by 2020, up from about 93 tril­lion yuan at the end of last year.

Be­tween 2012 and 2015, it had a com­pound an­nual growth rate of 51 per­cent on av­er­age, but that’s likely to be 13 per­cent over the next five years, the re­port said.

David He, a BCG part­ner and man­ag­ing di­rec­tor, said the no­tice­able in­crease is driven by mul­ti­ple fac­tors in­clud­ing the re­al­lo­ca­tion of res­i­dent wealth from hous­ing to fi­nan­cial as­sets, the grow­ing de­mand for in­vest­ment in pen­sions and en­dow­ment in­sur­ance prompted by an ag­ing pop­u­la­tion, and the need for com­mer­cial banks to build more ef­fec­tive al­lo­ca­tion mech­a­nisms for credit as­sets while com­plet­ing more di­ver­si­fied, mar­ke­tized busi­nesses.

Zhang Xuyang, gen­eral man­ager of asset man­age­ment at China Ever­bright Bank, said: “In the past, Chi­nese fi­nan­cial in­sti­tu­tions were more fo­cused on the li­a­bil­i­ties and own­ers’ equity by sup­port­ing com­pa­nies with loans and bond is­suance.

“But now, as China un­der­goes an eco­nomic re­struc­tur­ing, banks also need to pay at­ten­tion to the as­sets side, help­ing com­pa­nies defuse bad loans through asset-backed se­cu­ri­ti­za­tion and re­plac­ing less-ef­fi­cient cor­po­rate as­sets with those of higher ef­fi­ciency, through in­dus­trial in­vest­ment funds and buy­out funds.”

Hong Lei, pres­i­dent of the Asset Man­age­ment As­so­ci­a­tion of China, said that with the emer­gence of a grow­ing num­ber of small in­no­va­tive com­pa­nies spe­cial­iz­ing in dif­fer­ent mar­ket seg­ments, it would be un­suit­able to al­lo­cate re­sources through largescale credit funds, which will be re­placed by cap­i­tal raised in the form of as­set­man­age­ment.

The re­port es­ti­mated that com­mer­cial banks of­fer­ing wealth man­age­ment prod­ucts will be the most im­por­tant player in Chi­nese asset man­age­ment mar­ket by 2020, tak­ing a lead­ing 27 per­cent share of the mar­ket.

It will be fol­lowed by in­sur­ance asset man­age­ment at 16 per­cent, with pub­lic and pri­vate equity ex­pected to grow rapidly to 15 per­cent and 9 per­cent, re­spec­tively.

Mei Shiyun, deputy gen­eral man­ager of China Cen­tral De­pos­i­tory & Clear­ing Co Ltd, said the cen­tral se­cu­ri­ties de­pos­i­tory is work­ing with the China Banking Reg­u­la­tory Com­mis­sion on pro­mot­ing the cre­ation of in­de­pen­dent third­party cus­to­dian in­sti­tu­tions for wealth man­age­ment re­lated to banking in­sti­tu­tions.

“We want to im­prove the cus­to­dian sys­tem by spec­i­fy­ing the re­spon­si­bil­i­ties of trus­tees in a num­ber of as­pects, in­clud­ing ac­count open­ing, as­sets eval­u­a­tion and in­for­ma­tion dis­clo­sure,” he said.

“In this way, we’ll make the wealth man­age­ment mar­ket of the banking sec­tor more trans­par­ent and bet­ter pro­tect the in­ter­est of in­vestors.”

In this way, we’ll make the wealth man­age­ment mar­ket of the banking sec­tor more trans­par­ent and bet­ter pro­tect the in­ter­est of in­vestors?”

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.