Over-reliance on wealth management puts small Chinese banks at risk
Fitch Ratings has warned that too much dependence on wealth management products (WMPs) is putting China's smaller banks and financial institutions under greater credit and liquidity risks. According to figures from chinawealth.com.cn, the outstanding balance of WMPs stood at CNY 26.3tn at the end of June, up 11.83% from the start of 2016, or 17% of deposits. However, Fitch estimates that among mid-tier banks, WMPs represented 43% of deposits at the end of H1, up from 41% in the previous six months and just 22% at the end of H1 in 2014, making them "especially vulnerable."

Fitch estimates that among mid-tier banks, WMPs were equivalent to 43 per cent of deposits at the end of the first half, up from 41 per cent six months earlier and that “makes them especially vulnerable”. Photo: EPA