RMB Fund Management: Watch Out for Pitfalls of Price War

Since Everbright Bank first introduced in Beijing its RMB fund management service in July 2004, a total of six or seven medium and small-sized banks have offered their own versions of RMB fund management products across the country. These new financial products were met with ready sales with estimated total sales revenue of over 30 billion yuan to date.

"They sell like hell!" as bank staffs put it. RMB fund management products are catching more and more eyes not only because of their hot sales, but also because of the suspicion from some market insiders and the several orders of restriction by state regulatory bodies. For instance, some alleged that the banks are suspected to attract deposit with higher interest rates; others believed that the hiking earning rate might lead to vicious competition among the banks.

The regulatory bodies, for their parts, ordered that the banks remind their clients of investment risks, and forbad the banks from promising "guaranteed principal and interest."