Best private bank for product development 2020
China CITIC Bank Private Banking
Joint stock commercial bank China Citic Bank’s private-banking business has been growing quickly. With a team of 216 specialists, Citic picked up over 8,100 clients in 2019, up 24% and taking the total to nearly 42,000. Assets under management amounted to Rmb574 billion ($82 billion), up 22.3% over the year.
What is more impressive is Citic’s determination to continue expanding the range of products it can offer. That is not an easy task under China’s new asset-management rules, announced in 2018, and further changes last year that were designed to regulate banks’ wealth-management products. The new rules were part of a broader effort to contain risk in China’s financial system.
Before the new regulations, retail investors who purchased wealth-management products from Chinese banks enjoyed implicit guarantees from the banks on both the principal and the expected return of their investments.
Now China is shifting to products under so-called ‘net-value’ principles, where the yields for products are not advertised, but returns can be calculated based on a regularly announced net asset value.
Regulators are also stricter when it comes to the funds raised from the sale of asset-management products being used to invest in what were considered non-standard fixed income assets that lack both transparency and liquidity.
Against that backdrop, China Citic Private Banking still managed to sell Rmb847 billion worth of net-valuation products in 2019, with a further Rmb258 billion still outstanding by the year end – better than many of its peers.
It also accelerated the shift away from non-standard products as was required by Chinese regulators: standard products made up 34% of all products in 2019, up from 14% in 2018. But that was not at the expense of the private-banking products’ profit-making ability: Citic ranked as one of the most profitable among its joint stock peers in 2019.
Having developed a number of new products in cash management, fixed income, equities and private equity, Citic was also innovative in expanding its family-trust business. It accelerated a move into discretionary trusts and managed to increase the number of such products five-fold and the scale by more than three-fold, to Rmb35 billion by the end of 2019.