Agricultural Bank of China opens wealth management arm

ABC Wealth Management Co Ltd, a subsidiary of Agricultural Bank of China Ltd, officially opened for business in Beijing on Thursday and launched a series of new products.

"China's wealth management industry will embrace a historical transition of business models and a comprehensive restructuring of its ecosystem. The establishment of ABC Wealth Management is an important measure taken by the Agricultural Bank of China to carry out supply-side structural reform in the financial sector, further implement new regulations for the asset management industry, push for high-quality development of the real economy, and actively tackle changes in the wealth management industry," said Zhou Mubing, chairman of the Agricultural Bank of China, the country's third-largest commercial lender by assets.

He said the newly formed subsidiary will build its digital asset management capability, which is centered on the digital transformation of the bank, and will also strengthen collaborative development of the bank and the subsidiary under the premise that risks associated with the wealth management company are isolated from the bank.

To strengthen isolation of the parent bank's risk from that of the subsidiary, ABC Wealth Management formed a special committee to coordinate risk management, in addition to setting up internal audit, internal control and compliance departments. It will improve risk management in the areas of compliance risk, credit risk, market risk and operational risk.

Ma Shuguang, chairman of ABC Wealth Management, said the company will integrate data resources of the bank and external institutions; fully utilize financial technologies such as big data and artificial intelligence to define its core customers and analyze their transaction habits; and give support to product research and development, robo-advisory services and precision marketing. During the process, it will push ahead with construction of the next generation of asset management platforms.

Regulators require financial institutions to break implicit guarantees for principal and interest payments on wealth management products. To promote a transition of wealth management products toward net-asset-value products which will reflect risks on a timely basis, ABC Wealth Management launched four main categories of wealth management products on Thursday, ranging from cash management, fixed income and equity to mixed products.

It also launched two featured products. One specializes in agribusiness-related investments to satisfy farmers' demands in wealth management and support rural vitalization. The other focuses on investments in green bonds, green asset-backed securities, and credit assets of the companies that perform well regarding environmental protection, social responsibility and corporate governance.

The establishment of ABC Wealth Management followed similar moves taken by four other large State-owned commercial banks, while many other commercial lenders are accelerating efforts to set up their own wealth management subsidiaries, amid a transition of China's asset management industry.