Wed, Mar 12, 2014 - Page 15 News List

China to launch private-bank trial program

MONEY REFORM:The trial is to involve five private banks who will serve the community as well as small and micro-sized firms, the country’s banking head said

AFP, BEIJING

China will launch a trial program for private firms to set up banks, the country’s banking regulator said yesterday, with Internet giants Tencent Holdings Ltd (騰訊) and Alibaba Group Holding Ltd (阿里巴巴) reportedly among the first applicants.

Most Chinese lenders are state-controlled and banks founded by private companies are extremely rare, while access to lending is a key element of the Communist authorities’ control of the economy.

At a key meeting in November last year, the ruling party listed opening the banking industry to private investors as one of its major reform policies for the financial sector, to introduce competition and help small enterprises obtain loans.

“We have selected a few private capital [investors] to jointly participate in the trial program of [the setup of] five banks in the first batch,” China Banking Regulatory Commission chairman Shang Fulin (尚福林) said.

He was speaking at a briefing on the sidelines of the annual session of the National People’s Congress, China’s legislature.

Alibaba and Tencent, which have been expanding their online finance business in recent years, Shanghai-based conglomerate Fosun Group (復星集團), auto parts maker Wangxiang Group (萬向集團) and six other privately owned companies have been chosen to be the investors, the People’s Daily quoted Shang as saying in an interview.

Each bank will have at least two “founders,” Shang said at the briefing.

The banks will operate “independently” and will assume responsibility for risks and losses as well as profits, he said.

They will focus on “serving small and micro-sized companies and the community,” he added.

Shang did not give a timetable for them to start operations.

“We will push forward the trial of the five banks in a prudent manner, approving one only after it is ready to go,” he said. “That means the timing of their launch of operation mainly depends on themselves.”

Another key item on Chinese authorities’ reform agenda is allowing banks to decide their own interest rates for deposits, after the authorities loosened controls on lending rates last year.

China’s central bank chief Zhou Xiaochuan (周小川) said at the same briefing that allowance was expected within two years.

“The liberalization of deposit rates is definitely part of our plan. I personally think it is very likely to be realized in the next one to two years,” he told reporters.

This story has been viewed 1128 times.
TOP top