The retirement planning products are offered by the wealth management subsidiaries of four commercial banks: ICBC Wealth Management, CCB Wealth Management, CMB Wealth Management, and Everbright Wealth Management.
Under the pilot scheme, ICBC will launch its wealth management product (WMP) in Wuhan and Chengdu, CCB and CMB will launch their products in Shenzhen, and Everbright in Qingdao.
The scheme will run for a year, and each wealth manager can raise up to Rmb10bn ($1.57bn) for their WMPs within the scheme.
Individual investors who hold an identity card in one of these cities and meet certain investment criteria may buy the WMP either at the bank retail branches or through the banks’ mobile and online banking channels.
There is a limitation of Rmb3m worth of WMPs per investor.
The products are mainly invested in fixed-income, and will use “risk reserve, provision for assets impairment, and other methods to strengthen their risk resistance capacity and provide a relatively prudent choice of investment vehicles,” according to the China Banking and Insurance Regulatory Commission (CBIRC).
The minimum amount of investment is Rmb1, and the products have a maturity of five years. They have been registered in the national banking wealth management information registration system.
OTC derivatives banned
Separately, Chinese financial regulators also announced last week that they will prohibit banks and insurance firms from providing over-the-counter (OTC) derivative trading products to individual clients.
The People’s Bank of China, China Securities Regulatory Commission, State Administration of Foreign Exchange, and the CBIRC announced on their websites that derivatives should only be sold to “qualified investors”.
Derivatives trading services should also be provided to corporate clients for hedging purposes only, said the announcement.
The ban is listed among 18 drafted rules to “consolidate existing rules and regulations and promote healthy development of the derivatives market”.
