Small and Medium-Sized Bank Wealth Management Products Face Year-End Deadline Setbacks? Some Institutions Still Issuing New Products, Whether Regulators Approve New Wealth Management Subsidiaries This Year Becomes Key Signal

Cailian Press, March 11 (Editor: Wang Wei) Small and medium-sized banks’ wealth management product cleanup by the end of the year may see changes. Several bank wealth managers interviewed by Cailian Press expressed this view.

Since the beginning of this year, small and medium-sized banks have issued 1,598 public mutual funds, mainly closed-end products, with most maturity dates before 2027.

However, recent observations by Cailian Press show that many banks, including Zhejiang Fuyang Rural Commercial Bank, Kunlun Bank, Linshang Bank, Guangdong Nanyue Bank, Xi’an Bank, Changsha Bank, Dalian Bank, Hubei Bank, Zhongyuan Bank, and Guangxi Beibu Gulf Bank, have issued some closed-end wealth management products with maturity dates in 2027 and beyond. This is seen by the market as a signal of relaxed cleanup and rectification.

Previously, in 2024, regulators issued warnings about the risks of bank wealth management businesses that do not have established wealth management subsidiaries, requiring some provincial city commercial banks and rural commercial banks to fully clear their existing wealth management businesses by the end of 2026.

By 2025, the rectification has shown significant results. According to data disclosed by China Wealth Management Network, as of the end of 2025, there are 159 bank institutions and 32 wealth management companies with ongoing wealth management products nationwide. Compared to the end of 2024, 59 banks have reduced their issuing institutions.

With less than 10 months remaining until the original market expectation of the end-of-year rectification deadline, why are some banks still eager to issue new wealth management products?

“Since last year, regulators have been downplaying the tone of reducing and zeroing out. Currently, the regulatory stance is unclear, and there is no explicit requirement to clear out, so banks are adopting a wait-and-see attitude,” a person from a bank’s asset management department, which recently issued a wealth management product (maturity in 2027 and later), told Cailian Press. The bank is still issuing new products, but overall scale has slightly decreased.

A head of asset management at a northern bank told Cailian Press that whether new wealth management companies will be approved by regulators this year is an important signal. If new approvals occur, unapproved small and medium-sized bank wealth management businesses are likely to be cleared out. This person revealed that the original approval process by the State Financial Supervision and Administration Bureau now requires reporting to the Central Financial Commission Office, increasing difficulty.

Unclear Year-End Clearance? Whether New Wealth Management Companies Will Be Established Is a Key Signal

According to data from China Wealth Management Network, since the beginning of this year, small and medium-sized banks have not stopped issuing wealth management products.

Data shows that since the start of the year, these banks have issued 1,598 public mutual funds, mainly closed-end, with most maturity dates before 2027. However, as summarized by Cailian Press, many banks including Zhejiang Fuyang Rural Commercial Bank, Kunlun Bank, Linshang Bank, Guangdong Nanyue Bank, Xi’an Bank, Changsha Bank, Dalian Bank, Hubei Bank, Zhongyuan Bank, and Guangxi Beibu Gulf Bank have issued closed-end products maturing in 2027 and later.

For example, Zhejiang Fuyang Rural Commercial Bank’s “Fengshou Fuying Yixiang” 2026, Issue 626 RMB wealth management product operates in a closed manner, with an end date of 2027/10/12.

Some banks are still issuing new wealth management products, indicating a cautious and observant attitude toward regulatory policies.

A northern bank asset management department head told Cailian Press that whether new wealth management companies will be approved by regulators this year is an important indicator.

Multiple sources indicate that currently, eight banks are still in the application process for establishing wealth management companies. According to Qilu Bank, Changsha Bank, and Chongqing Bank, among others, industry insiders also mention Beijing Rural Commercial Bank, Shanghai Rural Commercial Bank, and Dongguan Bank. Additionally, public reports show that Henan Province has announced efforts to promote the establishment of bank wealth management subsidiaries by Zhongyuan Bank and Zhengzhou Bank.

Previously, Cailian Press reported that Chengdu Bank, Chengdu Rural Commercial Bank, and Sichuan Bank in Sichuan plan to jointly apply for establishing a bank wealth management company, with preliminary preparations already underway.

Luo Feipeng, a researcher at China Postal Savings Bank, also told Cailian Press that regulators previously required banks without established wealth management subsidiaries to reduce their existing wealth management businesses by the end of 2026, allowing for an orderly exit.

Small and medium-sized banks continue to issue wealth management products, partly due to the need to match the maturity of existing assets, as some underlying assets have later maturities; partly to ensure a smooth transition and avoid liquidity pressure from concentrated maturities.

A securities analyst told Cailian Press that the 2026 end-of-year clearance is a requirement in some provinces, but relevant nationwide regulations are not yet clear. In practice, the enforcement and intensity of regulatory policies may vary across regions.

“Moreover, for small and medium-sized banks still transitioning from agency sales, a one-size-fits-all approach could impose significant operational and revenue pressures. I believe regulators are providing some buffer and transition periods,” the analyst added.

Small and Medium Banks Accelerate Self-Management of Wealth, Some Shrink by 90%

On the growth side, although many banks are still issuing wealth management products this year, overall, small and medium-sized banks are accelerating rectification, with significant results by 2025.

According to data from China Wealth Management Network, by the end of 2025, 159 banks and 32 wealth management companies had ongoing products, down 59 banks from the end of 2024.

Specifically, based on data from Qilu Bank, Changsha Bank, and Chongqing Bank, among 80 sample city and rural commercial banks, most saw a significant decline in wealth management scale in 2025. The total scale of wealth management products among these 80 banks was about 14.2 trillion yuan in 2025, down approximately 18.34% from 16.2 trillion yuan in 2024.

Only seven banks achieved year-over-year growth, including Beijing Rural Commercial Bank, Shenzhen Rural Commercial Bank, Guangdong Huaxing Bank, Guiyang Rural Commercial Bank, Zhongshan Rural Commercial Bank, Foshan Rural Commercial Bank, as shown below:

[Data source: Enterprise Early Warning System, compiled by Cailian Press]

What’s Next for Small and Medium-Sized Banks’ Wealth Management Business? Industry Recommends Three Types of Regulatory Approaches

In the future, banks without established wealth management subsidiaries will be prohibited from issuing new products. As wealth management is a key part of wealth management, how should these banks participate?

According to previous media reports, while agency sales rapidly expanded, some small and medium-sized banks began exploring a “flexible transition” path—co-creating wealth management. Compared to pure agency sales, this model retains some original investment research capabilities within a compliant framework.

Specifically, small and medium banks and wealth management companies jointly select high-quality assets, establish a tripartite approved asset pool, and promote investments based on pre-agreed divisions of labor. If an asset in the pool encounters risk, the parties typically negotiate risk-sharing based on “who leads, who is responsible.”

In this model, third-party wealth management firms act as nominal managers, while the underlying asset selection, research, and investment decisions remain with the original bank, allowing the business to continue.

Is this model feasible? A northern bank asset management head told Cailian Press that this approach fundamentally deviates from the requirements of the new asset management regulations, which emphasize active management, and effectively changes the legal responsible entity. He also warned that future purely outsourced business might also be halted.

Additionally, “We recommend implementing classified regulation and guidance for small and medium banks,” an industry insider told Cailian Press. They suggest dividing banks into three categories: capable banks can conduct wealth management, but not expand geographically; the second category can issue products but with restrictions, such as only low-risk products; the third category is not allowed to conduct wealth management. For banks engaged in wealth management, regulators could set indicators like customer complaint rates to strengthen oversight.

(Cailian Press, Wang Wei)