Agricultural Bank of China Establishes Its Wealth Management Arm
The Agricultural Bank of China Ltd, which is China’s third-largest commercial bank, established a new subsidiary last week which will operate exclusively in the wealth management market. The newfound company goes by the name of ABC Wealth Management Co Ltd.
The Chinese wealth management industry has a huge potential for growth and disruption, and that’s why large financial institutions, both foreign and local, are looking to enter the market. The Chinese wealth management industry is in the process of restructuring of its ecosystem as business models are rapidly evolving across the sector.
The bank hopes to build up its capabilities in the domain of digital asset management with the setting up of this new arm. This will also go on to help it in bringing about a digital transformation of the bank in time. Furthermore, it will strengthen the collaborative growth of the subsidiary and the bank under the principle that risks borne by the wealth management company are cut off from the bank.
To further solidify and ensure such separation of the subsidiary’s risk from that of the parent bank, the wealth management arm has formulated a special committee to improve risk management through better coordination. An internal audit and an internal compliance department set up by the bank will further improve the management of the market risk, operational risk, compliance risk, and credit risk.
The company seeks to integrate the bank’s data resources with those of the external institutions. This will allow them to make the most of the technologies such as artificial intelligence and big data to better understand their target market and analyze their transaction patterns. It will then go on to enhance product development, precision marketing efforts and robo-advisory services. Along the way, the company will invest in the development of futuristic asset management platforms.
The wealth management arm of the bank released four basic wealth management products upon its launch last week. These include cash management, mixed products, and fixed income and equity management.
Two products were also featured on the same day. One is more inclined toward agribusinesses as it will exclusively serve the farmers’ market with its agribusiness-related investment activities. This will also support rural uplifting. The other product involves green bonds, credit asset, or green asset-backed securities of environmentally and socially responsible corporations.
The move by The Agricultural Bank of China Ltd to set up its own wealth management arm has encouraged other major banks as well as they speed up efforts to enter the lucrative asset management market.