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China cleanup of non-compliant WMP titles ‘essentially complete’, official says

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BEIJING — China has made progress in cleaning up non-compliant wealth management (WMP) products, a senior regulator said on Saturday, as he declared a transition period in a years-long crackdown on the sector “substantially complete”.

WMPs are investment vehicles marketed by issuers, including banks and promoters properties, from retail and corporate investors, often paying much higher returns than deposits. They rose to prominence as some of the heavily indebted Chinese developers faced a financial crisis.

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Cao Yu, vice chairman of the China Banking and Insurance Regulatory Commission, told a forum in Beijing that non-compliant short-term wealth management products and products with principal guarantees had been eliminated from by the end of 2021.

The vast majority of banks, especially small and medium banks, had rectified their WMP stock on schedule, he said.

Cao said financial fiduciary products accounted for a steadily declining proportion of WMPs, with non-compliant fiduciary products, used by some companies for financing, plunging more than 80%.

Chinese regulators imposed sweeping rules on the asset management industry in 2018 to curb bank wealth management products, part of a sweeping crackdown on large and often opaque financial risks.

(Reporting by Rong Ma in Beijing and Andrew Galbraith in Shanghai; Editing by William Mallard)