Financial China

Dawn of financial conglomerates raises prospects and risk

  • Published 23 Sep 2010

For years regulators stood firmly against the emergence of financial conglomerates but now it seems all banks want to run their own insurance, trust, brokerage and fund arms. The attractions are clear but so are the risks.

You might have thought that revelations earlier this year that Chinese banks were running an estimated Rmb 2,000bn ($2,982.9bn) in off-balance-sheet loans through associated Trust companies would be a strong argument against the blurring of regulatory lines between different branches of the financial industry. But no. Two years after opaque financial products contributed to the global financial crisis, Chinese regulators are presiding over a wave of integration in the financial industry. While it is clear that the emergent financial conglomerates may be powerful generators of higher returns, their dealings may also be more opaque to regulators and investors.

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