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 and zeroing out may see changes this year. Many bank wealth managers interviewed by Cailian Press expressed similar views.

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

However, recent observations by Cailian Press show that several 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 cleanup has shown significant results. According to data disclosed by China Wealth Management Network, as of the end of 2025, there are 159 banks and 32 wealth management companies with ongoing products nationwide, a reduction of 59 banks compared to the end of 2024.

With less than 10 months remaining until the original market expectation of the end-of-year cleanup 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. Banks are adopting a wait-and-see attitude,” a person from a bank’s asset management department, which recently issued a new product (maturing 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 are granted, unapproved small and medium-sized bank wealth management businesses are likely to be cleared out. This person also revealed that the original approval process by the National Financial Regulatory Administration now requires reporting to the Central Financial Commission Office, increasing difficulty.

Unclear Year-End Zeroing? Whether New Wealth Management Companies Will Be Established This Year 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 maturing 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 with maturity dates in 2027 and beyond.

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, and industry insiders, others include Beijing Rural Commercial Bank, Shanghai Rural Commercial Bank, 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 issuing 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 zeroing-out requirement is specific to some provinces, and 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-Managed Wealth Cleanup, Some Reduce by 90%

In terms of new issuance, 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, there are 159 banks and 32 wealth management companies with ongoing products nationwide, a reduction of 59 banks compared to the end of 2024.

Specifically, based on data from Qilu Bank, Changsha Bank, and others, the majority of these banks saw a significant decline in wealth management scale in 2025. Among 80 sample city and rural commercial banks, total wealth management assets in 2025 were about 14.2 trillion yuan, 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, Cailian Press compilation

Future of Small and Medium Banks’ Wealth Management Business? Industry Suggests Three Regulatory Approaches

Going forward, banks without established wealth management subsidiaries will no longer be allowed to issue wealth management products. As a key tool for wealth management, how should these banks participate in wealth management activities?

Previous media reports indicate that while agency sales rapidly expanded, some small and medium-sized banks began exploring a “flexible transition” path—jointly creating wealth management subsidiaries. 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 proceed with investments based on pre-agreed divisions of labor. If an asset in the pool encounters risk, the risk-sharing is generally negotiated in advance 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 banks, allowing the business to continue.

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

Additionally, “We recommend categorizing and guiding small and medium banks differently,” industry insiders suggested to Cailian Press. They propose dividing into three categories: capable banks can develop wealth management, but not in other regions; 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 business. For banks engaged in wealth management, regulators could set indicators like customer complaint rates to strengthen oversight.