On May 11, foreign media reported that the China Banking Regulatory Commission had suspended the hierarchical financial products of some city commercial banks.

So what are graded financial products?

How big is the risk?

Prior to this, there was no official definition of graded financial products in the industry.

However, everyone should be familiar with tiered funds. The parent fund is divided into A shares and B shares. A is the agreed income category. No matter how the market changes, it will obtain stable income. B is the leveraged share category. After paying A’s income according to the agreement,

, the remaining part, whether it is profit or loss, will be borne by B. Usually when mentioning tiered funds, most of them refer to B’s share.

Divide bank financial management into priority and secondary sub-products, and make the two have different risks and returns through the share and income distribution structure.

Graded bank financial products generally refer to high-risk, high-leverage parts.

The leverage coefficient of graded financial management products is relatively high, and most bank financial management funds are invested in the bond market. When bonds default on a large scale, graded financial management products face great risks.

Currently, there are not many banks that issue tiered financial products, mainly joint-stock banks and city commercial banks. Agricultural Bank of China, China Merchants Bank, Bank of Nanjing, Bank of Guiyang, Hengfeng Bank and many other banks currently have tiered financial products in existence.

However, China Merchants Bank said it has stopped issuing new such financial products.