Bank of Communications plans to apply for the revocation of its private banking license to deepen reforms of the retail sector's institutional mechanisms

On March 24, 2026, news about “Bank of Communications planning to apply for the cancellation of its private banking specialized institution license” attracted market attention.

In response, Bank of Communications stated that in order to strengthen its wealth finance characteristics and enhance customer service capabilities, it is implementing a reform of its retail sector system and mechanisms, approved by the board of directors. The bank is making relevant organizational structure adjustments, and the work is being carried out steadily in strict accordance with prescribed procedures. Existing private banking business services, rights, processes, etc., will not be affected.

At the end of 2025, Bank of Communications Vice President Zhou Wanfeng announced that a Wealth Management Department will soon be established at the head office level to further enhance wealth finance characteristics and improve customer service capabilities, with Jin Qi, the general manager of the Private Banking Department, concurrently serving as the head.

On February 27, 2026, Bank of Communications announced that the board of directors had reviewed and approved the “Proposal on Deepening the Reform of the Retail Sector System and Mechanisms.”

Liu Jing, head of the private banking department at a joint-stock bank, believes that the cancellation of the private banking specialized institution will help Bank of Communications coordinate the personal wealth management business across the bank, bridging the wealth service gap between high-net-worth clients and the general public, and pushing its retail sector to transition from “product sales” to “client full lifecycle asset allocation.”

Currently, there are two main development models for domestic private banking businesses: one is to integrate them into the bank’s personal financial or wealth management business segment for centralized management, and the other is to establish specialized private banking institutions.

In 2008, the former Shanghai Banking Regulatory Bureau and business administration agencies issued a private banking specialized institution license to Industrial and Commercial Bank of China based on the “Regulations on Promoting the Construction of Shanghai International Financial Center,” making it the first approved private banking specialized institution in the country.

Subsequently, Agricultural Bank of China, Bank of Communications, Industrial Bank, and Hengfeng Bank successively applied for and were approved for private banking specialized institution licenses.

The private banking specialized institution license was a business pilot project initiated by the former China Banking Regulatory Commission in Shanghai, established an operations center by the former Shanghai Banking Regulatory Bureau to carry out functional supervision of licensed private banking specialized institutions and to explore management models for licensed institutions’ business divisions. With certain operational management powers granted by the head office, private banking specialized institutions obtained decision-making powers such as independent accounting, autonomous operations, and independent decisions on external cooperation within certain business areas.

After being granted the private banking specialized institution license in 2012, Bank of Communications’ private banking business has continued to develop rapidly. By the end of June 2025, its assets under management (AUM) had exceeded 1.39 trillion yuan, and the number of clients reached 102,600.

Liu Jing admitted that relying on the operational flexibility granted by the specialized institution license, combined with the continuous increase in Chinese residents’ wealth and the growing number of high-net-worth individuals in recent years, banks’ private banking specialized institutions have achieved significant development in terms of AUM and client numbers. At the same time, the limitations of the private banking specialized institution model have gradually become apparent with changes in the market environment.

Although private banking specialized institutions possess a high level of autonomous operational decision-making authority, they still lack independence in employee performance incentives and external resource cooperation, leading to a lack of differentiated competition in product innovation, service upgrades, and resource integration, with increasing homogeneity in their business.

Moreover, while private banking specialized institutions have established dedicated teams of private banking client managers, a significant amount of financial services for high-net-worth clients still need to be completed at branch locations during actual business operations, requiring full cooperation of various business resources from branch locations. As independent accounting and autonomous operation private banking specialized institutions, how to precisely settle related service fees with branch locations is another issue.

As banks continue to streamline administration and delegate power, even if the private banking department belongs to the head office’s personal financial business or wealth management business, its operational decision-making autonomy is not significantly different from that of private banking specialized institutions.

Nie Junfeng, chairman of Jinghua Shijia Family Office, believes that whether the commercial bank’s private banking department obtains a specialized institution license does not have a substantial impact on its business scope or connotation.

Liu Jing analyzed that as financial services continue to penetrate deeper, the business limitations of private banking specialized institutions are being further amplified. For example, banks hope to extend certain financial products and services aimed at high-net-worth clients to the general public, which requires building a new system of coordinated collaboration in systems, services, and business with private banking specialized institutions, thereby increasing investment without necessarily forming good synergy effects. Therefore, by canceling the private banking specialized institution license, the bank’s head office can better connect the resources and clientele of different retail business departments, further expanding and strengthening its wealth management business.

Financial policy researcher Zhou Yiqin noted that in recent years, some banks applied to establish private banking specialized institutions primarily to highlight precise business positioning—focusing on the customized financial service needs of high-net-worth clients, thereby achieving better brand recognition and customer acquisition effectiveness; however, this has also led to insufficient business coordination between the private banking specialized institutions and the head office. Now, banks speeding up the integration of retail businesses aligns with the trend of collaborative efficiency and intensive development in the banking industry.