China clamps down harder on WMPs

Intends to increase transparency and reduce risk.

The China Banking Regulatory Commission, the banking sector regulator, said that all institutions are now required to report and register their newly issued wealth management products or WMPs on the regulator's system.

WMPs without this registration cannot be issued through any financial institution. The system is now operational.

CBRC requires banks to complete registering the WMPs issued between 2011 and 2012 by July 31. The next step will be separating WMPs from credit businesses, urging banks to clearly link WMPs with the assets that proceeds are invested in and increasing transparency.

CBRC will continue to regulate the WMP businesses in commercial banks, reinforce supervision and tighten risk control. Bank-issued WMPs totaled US$1.34 trillion by the end of the first quarter, of which 70% were invested in the real economy.

CBRC also orders that all individual WMPs must undergo auditing and banks must ensure products have balance sheets, income statements, cash flow statements and other financial reports.