The $15 trillion asset management sector has been a key
focus for China as it cracks down on financial risk. The
government has now released new rules targeting asset
management companies in its wide-ranging efforts to tackle
non-performing loans (NPLs).
While the rules were originally planned for implementation by
mid-2019, the deadline has now been pushed back to the end of
2020 to give asset management companies more time to
Nicholas Zhu, VP and senior analyst at Moody’s
explains that the regulation is credit positive for Chinese
financial institutions because the coordinated approach will
reduce the scope for regulatory arbitrage.
"Small and mid-sized banks will benefit most because they
originate and manage large amounts of asset management
products, and they also have large investments in asset
management products originated by other financial
institutions," said Zhu.
He added: "The regulation will reduce the increasing
interconnection among financial institutions. It will...