Summary
[Banks’ financial expansion encounters difficulties and public offering funds are soaring and waiting for the opportunity to overtake]As the transition period enters a five-month countdown, except for very few cases that have obtained regulatory approvals, they can strive to extend the disposal. Pressure drop. So a subtle situation emerged. According to the data obtained exclusively by the Securities Times reporter, because the head office pressured the issuance of wealth management subsidiaries faster than the wealth management subsidiaries, the remaining balances of the three major banks (group caliber) at the end of June decreased compared with the beginning of the year. Although the industry’s overall data has not yet been released, this phenomenon is of great signal significance: the three major banks themselves have a head effect, and their scale of management ranks in the forefront. Their shrinking scale may cause the bank’s financial management that has shrunk slightly in the first quarter to be in the second quarter. The growth rate has slowed down, and it may even be tied or overtaken by the soaring public offering funds. (Securities Times)
While the head office suppresses the expected return-based old products, the subsidiaries release net-worth products that comply with the new regulations. Together, we maintain the whole bank.Financial managementDecent scale-this is after the implementation of the new asset management regulations,BankAnd wealth management subsidiaries have been doing.
As the transition period enters a five-month countdown, except for very few cases that have obtained regulatory approval, they can strive for extended disposal.BankThe head office is accelerating the rectification and pressure drop of non-compliant stock products. So a subtle situation emerged. According to the data obtained exclusively by the Securities Times reporter, because the head office pressured the issuance of wealth management subsidiaries faster than the wealth management subsidiaries, the remaining balances of the three major banks (group caliber) at the end of June decreased compared with the beginning of the year.
Although the overall industry data has not yet been released, this phenomenon is of great signal significance: the three big banks themselves have a head effect, and the scale of management ranks in the forefront. Their shrinking scale may have caused a slight shrinkage in the first quarter.BankThe growth rate of financial management slowed down in the second quarter, and it may even be surging through public offerings.fundTie and surpass.
Coupled with the new cash management regulations restricting the scale of leading products, it is not easy for banks to maintain the glory of the largest asset management sub-industry.
Slowdown in scale growth becomes the new normal
Although various official reports use “stable” and “stable” to adjust bank financial management, in fact, its remaining balance has experienced negative growth in the first three months of this year. Data from the banking wealth management registration and custody center shows that as of the end of March this year, the scale of the wealth management market was 25.03 trillion yuan, a decrease of 830 billion yuan from the 25.86 trillion yuan at the end of 2020.
The same point in time (that is, the end of the first quarter) is a key node for positive results in the rectification work. The official statement of the regulatory authorities is that each bank has established a unified leadership mechanism, locked the base for rectification, established a ledger, and clarified the disposal plan. The rectification and reformation were in line with expectations. By the end of the first quarter of this year, the rectification and reformation had passed halfway.
At the end of the first quarter, bank wealth management is still the largest sub-industry in China’s asset management market, which is higher than the 21.56 trillion yuan for public funds, 17.73 trillion yuan for private equity funds, and 20.38 trillion yuan for trusts in the same period.
However, as the rectification of the existing wealth management business continues to accelerate, things may continue to change. As of the end of June this year, the scale of domestic public fund management has increased to 23.03 trillion yuan, which is just two trillion yuan behind the balance of bank wealth management at the end of the first quarter. The data on the scale of bank wealth management at the end of June has not yet been released, but the expectation is certain: if you think well, bank wealth management will stop falling and rebound, maintaining a small safety distance of two trillion yuan to public funds; but the greater probability is that banks The scale of financial management continued to shrink in the second quarter, and the gap with public funds narrowed to less than two trillion yuan.
In other words, no matter what the situation, the situation where the bank’s wealth management scale easily crushed public funds has gone forever, and it has struggled to maintain the weak glory of the largest asset management industry. With the intensification of residents’ propensity to allocate wealth and rights, bank wealth management is likely to be equalized or even surpassed by public funds.
This deserves the attention of the banking wealth management industry, but there is no need to worry too much. Because for bank financial management, this is a pain that must be experienced during the period of net value transformation that breaks nesting, reduces mismatches, and removes capital pools. At its peak, the compound annual growth rate of more than 50% is gone forever. Bank financial management is faced with fierce competitors and stricter operational requirements. It has to get used to slower expansion in exchange for a more stable structure.
There are also signs that the scale of bank financial management may be shrinking. The reporter learned exclusively that the balance of wealth management of three large state-owned banks (including wealth management subsidiaries) has decreased from the beginning of the year; the other two and China Merchants Bank have maintained positive growth, but the growth rate has also slowed compared with the same period last year. Will be confirmed in the semi-annual report.
Specifically, the three major banks that have shrunk in scale are all due to the reduction in the remaining balance of the parent bank’s management. In terms of group standards, the balances of the three major banks decreased by 14% to 17% compared with the end of last year, and the total balance decreased by about 1.12 trillion yuan; the two major banks and China Merchants Bank, whose management scale is growing, increased by 0.6% to 8%. Etc., an increase of 250 billion yuan.
All in all, the subsidiaries have maintained a positive growth in the scale of management and have been issuing net-value products, while the head office has been accelerating the disposal of stock business and has been suppressing expected profit-oriented products.
“Mother is heavier than child”
Structure needs to be reversed
Before the end of the transition period for the new asset management regulations, the countdown has officially entered a five-month period. This means that the asset management department of each head office must accelerate the rectification of existing products and accelerate the migration of products to wealth management subsidiaries. Because at the end of the first quarter, the management scale of banks and wealth management subsidiaries is still about 7:3, which is typical of “mother heavier than son.”
There are three types of wealth management products in the transitional market: the first type is new regulated products independently issued by wealth management sons; the second type is new regulated products issued and managed by the parent bank after the new regulations are promulgated; the third type is operated by the parent bank The expected return-based old product.
The “migration” or “transfer” often referred to in the market actually means that the parent bank transfers the second type of products to the subsidiary for management, and the wealth management subsidiary does not make secondary rectifications. Only product production capacity that meets the new regulations is injected. This is to isolate risks and ensure a clean start of wealth management subsidiaries.
Based on various factors such as the bank’s overall strategic planning, the balance of resources in the asset management sector, and the internal positioning of wealth management subsidiaries, the parent bank’s migration of products to wealth management subsidiaries varies in pace. The parent bank resource endowment and innate dividends obtained by wealth management subsidiaries are also different. Not every wealth management subsidiary will be able to fully stock or take over the stock of high-quality assets and products from the parent bank in large quantities. This has also led to a huge gap in the scale and profit of wealth management subsidiaries in the financial reports of various banks.
The progress of most banks in transferring products to wealth management subsidiaries has been relatively slow, resulting in a situation where “mother is more important than sons”. The official data at two points in time is sufficient to prove: at the end of 2020, the existing scale of wealth management subsidiary management products was 6.67 trillion yuan, accounting for 25.8% of the overall bank wealth management. Three months later (that is, at the end of March this year), the scale of the remaining products of the wealth management subsidiary was 7.61 trillion yuan, and its proportion in the overall scale of the bank’s wealth management rose to 30.4%.
That is to say, when there are 9 months left in the transition period-when the legal person of the wealth management subsidiary started for a full year and a half, the head office is still in charge of about 70% of the scale of the product. If products are migrated at this speed, it will be difficult to meet the standards at the end of the transition period. Speeding up rectification and speeding up the handover has become a top priority for banks.
However, in the second quarter, several banks in the forefront of management scale have made good progress.
The Securities Times reporter exclusively obtained data from six top financial managers and calculated their respective management scales. The banking wealth management industry is characterized by a high degree of concentration. These 6 banks (group caliber) account for nearly 50% of bank wealth management, which is about 11.15 trillion yuan. The migration progress of the six parent banks is more than half, and the proportion of the six wealth management subsidiaries in the bank’s management scale is in the range of 50% to 70%: the lowest is CCB Wealth Management and ICBC Wealth Management, and the management scale of the two wealth management subsidiaries accounts for only Slightly higher than 50%; the highest is Bank of Communications Wealth Management, with a management scale accounting for close to 70%.
This is why during the transition period, the “scale of independent issuance” should be emphasized. Because from the perspective of the whole bank, under the premise that the parent bank’s product transfer is slow and the scale is reduced at the same time (the reason for the pressure drop of the old product), the scale of the whole bank’s financial management must be reduced or even increased. We can only rely on financial management. Self-published products.
The reporter was informed that the two wealth management subsidiaries with the highest percentage of independent issuances are Bank of Communications Wealth Management and CCB Wealth Management. The ratios of the two companies are as high as 87% and 76% respectively, which to a large extent demonstrate the company’s marketization capabilities in asset expansion, asset allocation, and product issuance.
Restricted scale and reduced revenue
Cash management is difficult to support the overall situation
Although a transition period has been extended to the end of 2022, the new financial management regulations for cash management have been low-key. Therefore, cash management products will no longer support the rapid expansion of the bank’s wealth management scale.
Due to its convenience and cost-effectiveness, the scale of cash management products has quadrupled in the past three years. As of the end of March this year, the existing scale of cash management wealth management was 7.34 trillion yuan, accounting for 29.32% of the overall wealth management balance, and this proportion was only 10.7% in 2018.
In the era of independent legal personification, in the initial stage of establishment of wealth management subsidiaries, it is impossible for the operation mode to subvert traditional practices at once. Therefore, the current product structure of most wealth management subsidiaries shows the characteristics of cash management products accounting for half, fixed income products exceeding 90%, bond asset allocation accounting for the majority, and non-standard and equity investments accounting for relatively low proportions.
Due to the low risk appetite of the overall retail customer base of the head office, the proportion of cash management wealth management products in many wealth management products is only high and difficult. But now, two requirements restrict the upper limit of its scale: one is the month-end net asset value of cash management products that use the amortized cost method to account for, and the total must not exceed 30% of the month-end net asset value of all wealth management products; the second is to use amortization. The month-end net asset value of cash management products calculated under the cost method shall not exceed 200 times the month-end balance of its risk reserve.
“Several (wealth management subsidiaries) have exceeded the standard by a large margin and need pressure drop. But it does not mean that we will immediately stop adding new products. We recently released a new product according to the schedule. The rest of the transition period Within time, we will have overall pressure drop and rectification arrangements. This involves the adjustment of some asset valuation methods, as well as the rectification of investment scope, leverage level, portfolio duration, and concentration.” A person from the wealth management subsidiary of a major bank told a reporter from the Securities Times.
Now, there is a question that has been put on the overall planning agenda: who will fill the demand for low-risk, high-liquidity products after the shrinkage of cash management products?
The reporter learned from the relevant persons of the wealth management subsidiaries of the two banks that their common approach is to guide customers to short-term closed, fixed-open, and minimum holding period products, and to expand the scale of these products. The underlying assets are partially allocated to credit bonds valued by the cost method, exchange non-public corporate bonds, PPN (interbank non-public directional debt financing instruments), ABS (asset-backed securities), bank secondary capital bonds and other assets, as well as some short-term assets. Duration of the market value method of assets to ensure that the net value is in a stable range.
With the shrinking scale, another thorny issue facing cash management is the issue of earnings. The introduction of new cash regulations has predictably lowered the income of cash management products.
In the past, cash management products held bonds with a principal rating below AA+ and a remaining maturity greater than 397 days through credit sinking and extended duration, which were all assets with higher yields.The new regulations make it impossible for cash products to allocate a large amount of credit sinking bonds, private placement bonds, and tier 2 capital bonds, as well as new perpetual bonds, so cash products will be higher for a long time.Monetary FundThe advantage of dozens of basis points (BP) of BP will disappear.
More importantly, there are big bank financial management sonsCompany investmentFrom the perspective of the stability of the bond market, the manager analyzes that according to the new regulations, cash products will be sold through the secondary market to dispose of such assets, which is equivalent to giving market institutions a clear signal to short the valuation of existing positions.
Another person from the wealth management subsidiary of a joint-stock bank also put forward a point of view that is different from the mainstream view of the market. Citing data analysis, he stated that as of the end of the first quarter of 2021, the total asset management scale of the public fund industry reached 22.11 trillion yuan.currencyThe size of the fund’s existence is 91,000 yuan, which means that money funds account for 41.16% of the total assets of public funds. “We (cash management) account for less than 30%, and we mainly allocate bonds that support the real economy, which will be pressured down; most of the money in the money fund is not invested in the real economy, but it can naturally maintain a higher level than ours. Many scales. Not to mention that we are required to have a starting line with monetary funds in terms of ratings, maturities, and ratios, but we haven’t treated them equally in tax relief. I really think bank financial management is very difficult.” The person said.
“Bank financial management is different from public offering funds. The main and customer groups are different. Although we have to learn the investment and research capabilities of public offering funds, our core ability is to provide customers with long-term, stable and sustainable returns. Therefore, the underlying assets are built on The investment capacity requirements of the underlying assets are different. And we cannot be likefund companyIn that way,’Citizens don’t make money, but funds make money'”, another bank wealth manager told reporters.
(Source: Securities Times)
(Original title: Bank financial expansion encounters difficulties. Public funds are surging all the way and waiting for the opportunity to surpass. Affected by the new regulations, cash management products will not be able to support the rapid growth of financial scale)
(Editor in charge: DF537)
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