Growth in wealth products leaves China non-state banks exposed to liquidity risk
Smaller banks’ use of wealth management products to drive deposit bases poses liquidity and credit risk to broader sector
China's banking sector faces growing risks from smaller non-state-owned banks' aggressive issuance of wealth management products to attract and retain depositors, say analysts.
Wealth management products in China are similar to term deposits and are often linked to equities or equity indexes with tenors ranging from 30–90 days offering returns of 4–5% per annum on average. By comparison, the People’s Bank of China (PBOC) rate for a one-year term deposit is currently 3.25%.
State-owned banks had
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