On December 10, the Shanghai regulatory bureau of China Banking and Insurance Regulatory Commission officially approved the opening of Industrial Bank Co.Ltd(601166) private banking department and issued the financial license, marking the formal establishment of the first private banking franchise of joint-stock banks. It is worth mentioning that in May this year, the private bank of Hengfeng bank was approved for establishment, which means that Hengfeng bank may become the second private banking franchise approved for operation in recent ten years. “Compared with the private banking departments of branches, private banking franchises are more efficient and flexible in organizational structure, have greater voice and adapt to the market faster.
On December 10, the Shanghai regulatory bureau of China Banking and Insurance Regulatory Commission officially approved the opening of Industrial Bank Co.Ltd(601166) private banking department and issued the financial license, marking the formal establishment of the first private banking franchise of joint-stock banks.
It is worth mentioning that in May this year, the private bank of Hengfeng bank was approved for establishment, which means that Hengfeng bank may become the second private banking franchise approved for operation in recent ten years.
“Compared with the private banking departments of branches, private banking institutions are more efficient and flexible in organizational structure, have greater voice and adapt to the market faster.” The manager of a private bank told the Huaxia times.
the first private licensed institution of joint stock bank
Since the implementation of the new asset management regulations, the market competition of China’s wealth management institutions has become more customer-centered. With the acceleration of the net worth transformation of bank financial products, investors’ acceptance of net worth financial products has been continuously improved, the capital threshold of financial products has been reduced, the scale of individual investors has also been growing, and commercial banks have gradually changed from basic retail business to “big retail” such as wealth management and private banks.
According to the data of financial management registration center, in the third quarter of 2021, 11700 new products were launched in the bank financial management market, the raising scale was 31.87 trillion yuan, and the number of new investors was 9.8798 million. By the end of September, the existing scale of the bank financial management market had reached 27.95 trillion yuan, a year-on-year increase of 9.27%.
In addition, the growth rate of China’s high net worth population and its investable assets continued to rise compared with previous years.
According to the report data of 2021 private wealth report released by China Merchants Bank Co.Ltd(600036) , in 2020, the number of high net worth people with investable assets of more than 10 million yuan in China reached 2.62 million, an increase of about 650000 over 2018, holding 84 trillion yuan of investable assets, with an average annual compound growth rate of 17%. Overall, high net worth individuals hold about 32.09 million yuan of investable assets per capita.
On December 10, the Shanghai regulatory bureau of China Banking and Insurance Regulatory Commission officially approved the opening of Industrial Bank Co.Ltd(601166) private banking department and issued the financial license, marking the formal establishment of the first private banking franchise of joint-stock banks.
Insiders believe that under this background, the establishment of private banking franchise institutions is an inevitable need to adapt to China’s economic transformation and upgrading, embrace the era of wealth management and realize the high-quality development of banking business.
Previously, the banks that obtained the private banking franchise license were mainly large state-owned banks: Industrial And Commercial Bank Of China Limited(601398) (2008), Agricultural Bank Of China Limited(601288) (2010), Bank Of Communications Co.Ltd(601328) (2012).
It is reported that Industrial Bank Co.Ltd(601166) private banking franchise was approved for establishment in April this year, and it is also the only private banking franchise approved by the regulatory authorities for operation in the past decade.
The CBRC said that the Industrial Bank Co.Ltd(601166) private banking department to be established in Shanghai should start business within six months from the date of receiving the business license.
Industrial Bank Co.Ltd(601166) retail business grew rapidly. According to the data of the bank’s 2020 annual report, as of the end of the reporting period, Industrial Bank Co.Ltd(601166) retail customer management had a total asset of 2.61 trillion yuan, an increase of 22.87% over the end of the previous year. There were 79.5569 million retail customers, including 3.4616 million VIP customers, an increase of 7.21% over the end of the previous year.
The data show that up to now, Industrial Bank Co.Ltd(601166) private banking customers have reached 58000, and the scale of financial assets managed by customers has exceeded 760 billion yuan.
“The establishment of a private banking franchise will help Industrial Bank Co.Ltd(601166) further optimize the wealth management business model and operating system, continuously improve the service functions of private banks, improve customer service level, create a high-quality private bank that meets the needs of people’s better life in the new era, and polish the business card of ‘wealth bank’.” Dai Xuxian, general manager of private banking department, said.
carry out private banking business in combination with practice
China’s private banks officially started in 2007. Over the past decade, China’s private banking business has developed rapidly.
According to the data of China private bank development report (2021) and China Private Bank charity white paper released by Bank Of China Limited(601988) Industry Association, by the end of 2020, the asset management scale of Chinese private banks was 17.26 trillion yuan, a year-on-year increase of 22.09%, and the number of private bank customers reached 1253400, a year-on-year increase of 21.53%.
At present, there are two main development modes of private banking business: one is to set up a branch private banking department and set up private banks as a primary department; One is to set up special private banking franchise institutions, which belong to branch level franchise institutions.
“Compared with the private banking departments of branches, private banking institutions are more efficient and flexible in organizational structure, have greater voice and adapt to the market faster.” The manager of a private bank told the Huaxia times.
Dong ximiao, chief researcher of Zhaolian finance, said that the private banking department, as a professional institution, inevitably has a conflict of interest with the private banking department of the branch, and the branch has obvious advantages in customer relations. At present, he is not in favor of “independence” of the private banking department.
“Previously China Minsheng Banking Corp.Ltd(600016) tried to take the private banking department as a special business department in the industry (different from franchised institutions), but later changed it back.” Dong ximiao added, Bank Of China Limited(601988) there are still many problems to explore and break through in the organizational model of private banking business.
“The choice of private bank management mode needs to be combined with the bank’s own advantages and related to the bank’s own development strategy.” Insiders told reporters.
(Huaxia times)
