Text/"Tsinghua Financial Review" Bai Haochen
Since the second quarter of 2024, the mainland wealth management market has become more popular. As of June 14, the scale of the mainland wealth management market has reached 29.84 trillion yuan, approaching the 30 trillion mark. Local governments urge banks to speed up the liquidation of wealth management proprietary business, and small and medium-sized banks' wealth management business is faced with a choice between proprietary and agency sales.
After the management scale of public funds exceeded 30 trillion yuan in April this year, the scale of bank wealth management also came to the 30 trillion yuan mark. According to Puyi Standard data, as of June 14, the scale of the mainland wealth management market has reached 29.84 trillion yuan. Since the beginning of the year, the popularity of the bank wealth management market has continued to rise, with a high increase of 3.04 trillion yuan.
Figure 1: The scale of the national bank wealth management market since 2024 (trillion yuan)
Source: Puyi Standard
As early as 2018, there was a glorious period of bank wealth management with a management scale of more than 30 trillion yuan. However, with the implementation of cooling measures to strengthen market norms such as breaking the rigid exchange and removing the channel, consumers' pursuit of the wealth management market has become more rational, and the scale of wealth management has shrunk to less than 30 trillion yuan, which has been surpassed by public funds. However, the popularity of the market since the beginning of the year marks that the scale of wealth management has returned to 30 trillion yuan after six years, only one step away.
First, the substitution effect of bank wealth management on deposits has emerged. Against the backdrop of the continuous decline in the deposit interest rate of commercial banks and the suspension of manual interest supplementation, the rate of return on deposits continued to be sluggish. The sluggish deposit interest rate can no longer fully match the increasing demand of residents for asset preservation and appreciation, and the deposit spillover effect is obvious. Some depositors are actively seeking low-risk investment targets, and the substitution effect of wealth management products on deposits continues to increase. Stable and low-volatility wealth management products are favored by investors and have become the main growth point for the expansion of the wealth management market.
Since the beginning of this year, the bond market has been bullish, with medium and long-term bond interest rates falling significantly, with the yield on 10-year Treasury bonds falling to 2.21% and the 30-year yield falling below 2.41%, hitting a record low. Against the backdrop of the bond market, fixed-income wealth management products with a high proportion of bonds in the portfolio performed well. According to Puyi Standard data, as of the end of May 2024, the investment income of fixed-income wealth management products in the national wealth management market in the past six months was 1.66%, which is at a historically high level. Since 2024, the scale of fixed-income wealth management has increased by 2 trillion yuan. From a macro point of view, the mainland economy may be in the "era of low interest rates" for a long time, and in the environment of low interest rates, wealth management, public offerings, and insurance will have a relatively obvious substitution effect on bank deposits.
Figure 2: The interval investment rate of fixed income products in the national bank wealth management market by month
Source: Puyi Standard
Second, the agency sales system has been gradually improved, and the ability to develop wealth management and business has been consolidated. In recent years, the regulatory authorities have continued to reduce the scale of banks' wealth management self-management, and frequently urged the establishment of wealth management subsidiaries or the liquidation of self-operated businesses to consignment sales. Some banks with smaller proprietary wealth management scale have taken the lead in turning to "pure consignment sales" and have formed more mature business models and methodologies. The "self-operated to consignment" of some banks' wealth management business has optimized the operation of the market.
On the one hand, the liquidation of self-operated business has effectively alleviated the problems of serious homogenization of market products and frequent vicious competition between institutions, clearly sorted out the market product chain, and effectively reduced the burden and improved the quality of market players.
On the other hand, consignment sales and self-operated business are in the same line, and the business models are similar in product marketing, customer retention, investment and education. The bank has a mature wealth management team, which can quickly adapt to the transformation from self-operation to consignment sales. Mature distribution agencies provide extensive and intensive contact points for the industry and wealth management companies, which greatly enhances the bank's ability to tap and expand its stock and continue to promote market expansion.
In the context of low interest rate environment and reform, bank wealth management is starting a new round of upsurge. Compared with the "reproduction of high-interest savings" before the new regulations on asset management, the wealth management market at this stage is more market-oriented and standardized. The emergence of wealth management companies has strengthened the risk isolation mechanism of wealth management business and enhanced the professionalism of wealth management investment research and business development. With the gradual implementation of relevant policies, the wealth management business of banks is gradually tilting towards wealth management companies, until it is completely carried out by wealth management companies.
The wealth management business of small and medium-sized banks is faced with the choice between self-operation and consignment sales
It is reported that a number of small and medium-sized banks have received notices a few days ago, requiring them to clear their wealth management business by the end of 2026. The Guiding Opinions on Regulating the Asset Management Business of Financial Institutions clearly state that financial institutions whose main business does not include asset management business shall establish an asset management subsidiary with independent legal person status to carry out asset management business and strengthen the risk isolation of legal persons. Those who do not meet the conditions for the time being may set up a special asset management business operation department to carry out business.
In recent years, the local government has gradually reduced the scale of banks' wealth management business, and this notice represents that the bank's wealth management business has come to a crossroads, and banks need to choose to set up wealth management subsidiaries to continue to carry out wealth management proprietary business or completely abandon proprietary wealth management to consignment business.
Some analysts have pointed out that for banks with small wealth management scale, it is often difficult for wealth management business to achieve breakeven and effective risk isolation, so it is a reasonable choice to withdraw from proprietary wealth management, and consignment sales may become the only way for their wealth management business to grow. For those banks with a wealth management scale of more than 50 billion yuan, obtaining a wealth management subsidiary license has become a top priority.
At present, there are still more than 10 banks in mainland China with a wealth management scale of more than 50 billion yuan that have not obtained wealth management sub-licenses, among which the largest Shanghai Rural Commercial Bank has a wealth management scale of 181.9 billion yuan by the end of 2023. The former China Banking and Insurance Regulatory Commission once said that wealth management companies are "mature and approved by one". Shanghai Rural Commercial Bank, Bank of Jilin, Zhongyuan Bank and many other banks have announced that they will apply for wealth management subsidiaries. As the 32nd wealth management subsidiary approved for establishment, Zhejiang Bank Wealth Management has not yet opened as of the end of June 2024.
Overall, in the context of low interest rates, the increasingly sound market mechanism is expected to promote the continued expansion of the wealth management market. Banks and wealth management subsidiaries should perform their respective duties, carry out bank wealth management business in accordance with laws and regulations with the coordination of the regulatory authorities, consolidate investment research and business development capabilities, strengthen the implementation and selection mechanism of wealth management products, prevent and resolve risks existing in business and investment activities, do a good job in consumer investment education and consumer protection, and adhere to the original intention of "being entrusted by others and managing wealth on behalf of customers".
This article is edited by Bai Haochen
Editor丨Qin Ting, Lan Yinfan
Preliminary trial丨Xu Lanying
Final Review丨Zhang Wei
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