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On June 6, the 217th Regular Press Conference of Banking and Insurance Industry was held in Beijing. Xu Xueming, Vice President of Postal Savings Bank of China (“PSBC”), introduced PSBC’s practices of serving the real economy and the masses through wealth management business and the plan to promote the transformation and development of the Bank’s asset management business themed on “Actively Promoting Transformation of Asset Management Business to Fully Support the Development of the Real Economy”. Bu Yanhong, General Manager of the Asset Management Department of PSBC, also attended the press conference.
Adhering to “Two Serves” for steady development of wealth management business
Positioned to serving “Sannong”, urban and rural residents and small and medium-sized enterprises and upholding the concept of inclusive finance, PSBC is committed to providing services to the most promising customer groups in China’s economic transformation.At present, PSBC is speeding up its transformation and development.PSBC will give full play to its resource endowment, increase support to the real economy, deepen the transformation on five aspects to make the Bank unique, comprehensive, light, intelligent and intensive and strive to build a large and unique retail commercial bank, said PSBC Chairman Zhang Jinliang.
Asset management companies is an important part of the financial market, while banks’ wealth management isquite crucial in that it plays an important role in meeting individuals’ demands for wealth management, supporting the development of the real economy, optimizing the social financing structure, etc.As an advocate and active practitioner of inclusive finance, PSBC has attached great importance to wealth management business.PSBC launched its wealth management business with approval in 2007 and officially issued wealth management products in 2008.In the past 12 years, riding through cycles in the bond and the stock market, PSBC’s wealth management business has seen comprehensive improvement in investment, product, operation and risk control capabilities.As at the end of May 2019, the balance of PSBC’s wealth management products recorded RMB843.3 billion.
In the operation of wealth management business, PSBC has always been adhering to “Two Serves”. First is to serve the real economy.PSBC has, by giving full play to the direct financing by wealth management business, provided enterprises with a full life-cycle investment and financing services through ways such as loans, bondsand equity, etc., made contributions to national key strategies and livelihood projects, injected new impetus to strategic emerging industries, stimulated the vitality of private enterprises and reduced the financing costs of enterprises.In the past three years, PSBC has offered a total of over RMB100 billion wealth management funds to support private enterprises.Second is to serve the people.PSBC has approximately 40,000 outlets and 587 million individual customers. 70% of its outlets are located in county territory. Relying on the huge network, PSBC has actively put the concept of inclusive finance into practice, playing an important role in increasing the property income of customers in county and rural areas.
To better fulfil the idea of “Two Serves”, PSBC has always followed the concept of prudent operation. On the product side, PSBC has insisted on selling the right products to the right customers, providing low-risk wealth management products with stable returns to customers and fully disclosing information; on the asset side, PSBC has included wealth management business in the Bank’s unified risk management system, adhered to the ideas of movement between assets and investment diversification as well as an investment strategy for stable returns with less fluctuation.PSBC has won “Best Risk Control Award for Wealth Management Institutions in the Chinese Banking Industry” issued by the China Banking Association twice.
With over a decade’s exploration and practice, PSBC’s wealth management business demonstrates the following features. First, a high proportion of retail customers.In the past three years, PSBC has served 23 million retail customers in terms of wealth management business, with a compound annual growth rate of 28%; as at the end of May 2019, the AUM of retail customers recorded RMB784 billion, accounting for 93% of the total AUM.Second, a high proportion of county customers.In 2018, the sales of PSBC’s individual wealth management products was RMB1.63 trillion, of which 58% was sold in counties and areas below the county level.Third, a high proportion of investment in standardized assets. As at the end of May 2019, PSBC invested RMB741.7 billion wealth management funds in standardized assets including bonds, which accounted for 84% of the total funds.
Speeding up transformation and actively preparing for the establishment of a wealth management subsidiary
Since last year, new regulations on asset management, new regulations on wealth management and administrative measures for management of wealth management subsidiaries have been launched in succession.Fully realizing the significance of transformation and development of asset management business, PSBC has resolutely implemented the decisions and arrangements of the Party Central Committee and the State Council, and actively advanced relevant work on transformation and development according to regulatory requirements.
First, speeding up business transformation.PSBC adheres to the general principles of regulation first, steady transition and strict risk control and has focused on key and difficult areas such as product transformation, sales transformation, resolution of stock non-standard assets and risk management transformation.In the meantime, as customers are much concerned aboutthe trend of breaking away from implicit guarantee and changing into net value wealth management, PSBC has made comprehensive use of various channels to educate investors, strengthen investor suitability management and protect investors’ legal rights and interests.As at the end of May 2019, PSBC’s net worth products accounted for 17.3%.
Second, actively preparing for the establishment of a wealth management subsidiary.Based on the principle of separating the personnel, business and system of the wealth management subsidiary from the parent company, PSBC has set about the preparations for the establishment of a wealth management subsidiary, with focuses on system building and introduction of additional professionals.In particular, in terms of system building, by rebuilding business process, improving IT empowerment and highlighting multi-scenario application, PSBC aims to build the IT system of its wealth management subsidiary into a leading asset management business platform in China that integrates product management, investment management, sales management, customer service, embedded risk control and intelligent operation.In the meantime, PSBC has recruited nearly 100 professionals through market-based mechanism, who will be in place successively in the near future.
Recently, PSBC received the official approval from the regulator regarding its application for the establishment of a wealth management subsidiary.The Bank has great expectations for the future development of the wealth management subsidiary.Next, the wealth management subsidiary will adhere to the original aspiration of “entrusted by the client and managing money for the client”, further assist PSBC in building a large and unique retail commercial bank, and provide wealth management services with stable returns and controllable risks to customers in urban communities and county areas.PSBC will, by giving full play to its professional strength as an institutional investor, open up both channels of direct and indirect financing, link up customers’ investment demands with the financing demands of the real economy, promote effective use of wealth management funds in the capital market, facilitate the building of a multi-level capital market, and serve the financial supply-side structural reform,making new contributions to the high-quality economic development and the building of an innovation-oriented country.