THE banking and insurance regulator will soon publish detailed rules on banks’ wealth management products (WMPs) as part of the government’s effort to curb risks in the financial sector, said sources familiar with the matter.

The rules, which would tighten banks’ risk control of the country’s US$4.63 trillion WMPs, follow the long-awaited publication by the central bank in April of broad new regulations on the US$15 trillion asset management industry that are scheduled to kick in after 2020.

China is in the third year of an ambitious campaign to reduce risks in its financial system stemming from a rapid build-up in debt, which the Bank for International Settlements has warned could lead to a banking crisis.

The country’s regulators are moving to keep up with fast-growing financial innovation as lenders and investors scrounge for higher returns while borrowers, unable to secure bank credit, turn to other means for funding, creating potential systemic risk.

In the forthcoming rules, the China Banking and Insurance Regulatory Commission (CBIRC) is likely to adjust the limit for exposure of bank wealth management products to so-called non-standard investments, known widely as “shadow banking” products, said one of the sources.

Currently, such investments by banks cannot exceed 35 percent of the outstanding amount of their wealth management products, or 4 percent of their total assets.

By the end of 2017, 562 banks had 29.54 trillion yuan (US$4.63 trillion) in outstanding WMPs, according to official data.

(SD-Agencies)