The Commercial Bank Of China Private Bank Financial Product Development Present Situation Analysis And Development Strategy Research

Private banking business ranks at the top of retail banking service and financing business chain of the whole commercial banks. Vigorous development of private banking business is one of important strategic measures for commercial banks to adjust income structure and profit-making modes.Research object of this report is financing products of Chinese private banks. Foreign private banks are confronted with the problem of localization in China, while Chinese banks face a completely new problem in the process of conducting private bank financing products and require overall exploration. Thus, financing products of Chinese private banks have a higher research value.First, this article analyzes Chinese private bank market. As of the end of 2010, population of high net worth individuals in China had reached 383,000 and their total investable assets had reached RMB 22,400 billion. As estimated, such two figures will experience growth at average speed of 17.5% and 13.6% respectively in future five years. In the aspect of wealth distribution, from 2008 to 2010, percent of investable assets held by Chinese high net worth individuals in total amount of the whole country is 19.9%,21.4% and 22.4% respectively. As estimated, there will be 11 provinces (cities) with over 10,000 high net worth individuals at the end of 2010. Total population of high net worth individuals in such provinces (cities) is around 290,000, exceeding 75% of total population of Chinese high net worth individuals and reflecting obvious structural centralization and geographically regional centralization. Chinese high net worth individuals established business and completed primitive accumulation of wealth in the process of high-speed growth of Chinese economy, which differs from most of wealthy European and American customers who obtained wealth through inheritance. Thus, Chinese high net worth individuals display such characteristics as "preference to direct investment", "preference to participation in decision-making" and "expectation of high return". With popularization of private banking business and deepening of customer investment and financing concept, market scale of private banks will experience explosive growth.Second, the author analyzes importance significance of financing products on development of private banking business of Chinese commercial banks. This article points out Chinese commercial banks have less investment instruments to design investment portfolios for high net worth individuals compared with advanced private banks in the world. Thus, whether satisfaction of demands of high net worth individuals, improvement of competence or final realization of gains, it is of vital importance to strengthen innovation in financing products. It is necessary for Chinese private banks to establish open product platforms and make efforts to strengthen research and development of financing products within the scope allowed by prevailing regulatory policies.Third, the author conducts thorough analysis of current situations of development of financing products of Chinese commercial banks and private banks, including regulatory policies, product system, product management and development trend. Through nearly three-year’s development, regulation and support over financing products of private banks has been strengthened to some extent. Private banks have made great progress in the aspect of financing products, continuously enriched product types, continuously accelerated frequency of product launching and gradually become mature in the term of product management, providing more and abundant investment channels for high net worth individuals and obtaining certain incomes for banks. Meanwhile, overall development trend of financing products of private banks is favorable in China.Fourthly, this article analyzes main problems and main restriction factors existing in development of Chinese commercial banks and private banks. Existing main problems include insufficiency of product lines and absence of obvious difference from the public financing products, failure of providing customized financing products for high net worth individuals and weak product exclusivity, remaining at the early development stage of selling single financing product and absence of capability of providing long-term and systematic financing products for high net worth individuals, etc. Main factors causing foregoing problems include separate operation of domestic financial industry, limited investment channel at home and abroad, absence of special regulatory rules at home, failed realization of the concept of "buyer responsible for profits and losses", vague orientation of private banks and higher cost for coordination among different business lines within banks and insufficiency of financial mixed work experience, products and talents, etc.Lastly, On the basis of summarizing financing product system and successful experience of foreign commercial banks and private banks, and in response to problems and restriction factors existing in financing products of Chinese commercial banks and private banks, the author puts forward proposals related to development strategies in combination with theories and practice. The short-terms’strategies mainly include: Commercial banks shall obtain full authorization for research and development of private banking financing products. Commercial bank shall encourage innovation and strengthen assessment and management over head offices and each branch of private banks, strength internal and external cooperation, broadly absorb internal and external resources, jointly research and develop products meeting high net worth individuals, adopt innovation thinking of first imitation and then transcendence, realize transcendence in the process of imitation and finally form product system of commercial banks and private banks with local characteristics. The mid-terms’ strategies mainly include:commercial banks shall introduce outstanding talents in different financial fields, especially investment and product experts with financial mixed work experience, Financing products of private banks shall return to the nature, really realize orientation to customer demands. The basic principle of "buyer responsible for profits and losses" should be implemented against financing products of private banks in the process of regulation. The long-terms’strategies mainly include:allow commercial banks to own the license for comprehensive assets management business, establish special oversea investment policies in accordance with financing products of private banks, launch special regulatory rules over financing products of private banks as soon as possible.