NEW rules for the wealth management units spun off from China’s gigantic banks could help them grab market share in the country’s US$15 trillion fund industry.

Regulations that took effect this week removed minimum investment levels and permitted the entities to invest directly in stocks, putting them in a position to claw business away from other asset managers.

Previously, the funds could only be directly invested in fixed-income products, limiting the scope for returns.

“The new rules will intensify both competition and cooperation between banks and mutual fund firms,” said Wang Yifeng, Beijing-based researcher at China Minsheng Banking Corp.

Mutual funds have the benefit of experience but banks have wider client bases and stronger service networks, he said.

About 20 banks have announced plans to spin off their wealth management units, with total registered capital of 120 billion yuan (US$18 billion).

The high capital-level required offers existing mutual funds time to entrench themselves in the market, said Zeng Gang, a researcher at the Chinese Academy of Social Sciences.

Yang Delong, chief economist and investment manager at First Seafront Fund, said bank subsidiaries may opt to invest through existing money managers, so incumbents would still have a role to play. (SD-Agencies)