June 6, 2019 / 11:59 AM / 10 days ago

Postal Savings Bank of China bullish on equity investments

BEIJING (Reuters) - Postal Savings Bank of China said on Thursday it will raise the proportion of equity investments in its holdings, a move that indicates a further shake-up of country’s capital markets as large banks spin off their wealth management units.

Equity investments only account for 4% of the bank’s investments at present, Xu Xueming, vice president of Postal Savings Bank of China, told a weekly briefing held by China’s banking and insurance regulator.

The bank, which embraces the largest network of branches in China, was sitting on outstanding wealth management funds of 843.3 billion yuan by the end of May, the lender said. It also has 8 trillion yuan worth of savings due to its massive client base in rural areas.

Xu said no specific target for the investment increase has been set, but the lender will look into opportunities in pre-IPO deals, private equity investments, as well as direct investment into mainland’s stock market.

“Banks have been investing in bonds for a long time, which is our advantage,” Xu said. “But now the stand-alone wealth management units will allow us to participate in the secondary market, and gradually, become a massive and stable funding source to help building China a healthy, dynamic and resilient capital market.”

The giant lender will also look into investing in funds that support emerging industries such as high-end manufacturers, 5G technology, and biotechnology firms, according to Xu.

Six major state-owned banks, including Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China and Bank of Communications, have all been approved by the regulator to establish such units.

The regulator unveiled in late 2018 long-awaited rules governing commercial banks’ asset management subsidiaries, relaxing the investment criteria of wealth management funds for banks.

Reporting by Cheng Leng and Beijing Monitoring Desk; Editing by Jacqueline Wong and David Evans

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