Chinese shares slumped on Thursday, led by banks due to regulators' policies to control wealth management products.

The benchmark Shanghai Composite Index declined 2.82 percent, or 64.96 points, to end at 2,236.30. The Shenzhen Component Index lost 2.88 percent, or 265.86 points, to 8,959.26.

Combined turnover on the two bourses stood at 192.2 billion yuan (30.65 billion U.S. dollars).

The bank sector dropped nearly 6 percent. Ping An Bank, a subsidiary of Ping An Insurance, shrank 9.62 percent, close to the daily limit of 10 percent, to 20.02 yuan per share. Industrial Bank, based in Fujian Province, dropped 10 percent to 17.87 yuan per share.

To improve transparency, the China Banking Regulatory Commission on Wednesday issued a notice requiring commercial banks to manage wealth management products separately, instead of putting them into a "pool."

Banks were under pressure after the State Council on Wednesday vowed new measures to liberalize interest rates and foreign exchange rates, as well as to develop multi-layer capital markets.

The Industrial and Commercial Bank of China, the nation's biggest listed lender, slumped 2.67 percent to 4.01 yuan per share. The China Construction Bank dived 2.56 percent to 4.56 yuan per share. The Bank of China lost 2.69 percent to 2.90 yuan per share.

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