Tue, Sep 30, 2014 - Page 15 News List

Alibaba receives private bank approval

REFORM:In the past two months, the Chinese government has given approval to the set up of five new private banks in an attempt to restructure the banking sector


Chinese e-commerce giant Alibaba (阿里巴巴), which completed the world’s largest stock offering earlier this month, has received approval to set up a private bank.

The China Banking Regulatory Commission yesterday said that Alibaba would be the majority shareholder with a 30 percent stake in a private bank to be established in the eastern province of Zhejiang, where the company is headquartered.

Alibaba’s ambitions extend beyond e-commerce and it has already sought to shake up state banks with a financial product called Yuebao (餘額寶), an investment fund that offers better returns than traditional deposits.

Other major shareholders in the newly approved bank include units of privately owned conglomerate Fosun Group (復星集團) with 25 percent, auto parts maker Wanxiang Group (萬向集團) with 18 percent and investment firm Yintai (銀泰) with 16 percent.

Alibaba’s listing on the New York Stock Exchange raised a total of US$25 billion, making it the largest stock offer in history and founder Jack Ma (馬雲) the richest person in China, according to Hurun Report.

Alibaba, estimated to hold more than 90 percent of the Chinese market for consumer-to-consumer transactions, embarked on an acquisition frenzy before the listing.

Shenzhen-listed Beijing Shiji Information Technology Co Ltd (北京中長石基信息技術股份有限公司), which provides IT solutions to the hotel industry, said a subsidiary of Alibaba had signed an agreement to pay 2.81 billion yuan (US$457 million) for a 15 percent stake in the company, according to stock exchange filings.

The banking regulator also approved a Shanghai-based private bank whose major shareholder will be JuneYao Group (均瑤集團), which has businesses ranging from food to aviation.

JuneYao will hold 30 percent and apparel maker Meters/bonwe will take 15 percent, the commission said.

China recently approved five private banks, including one invested in by Internet giant Tencent (騰訊), parent of China’s messaging app WeChat, and a rival of Alibaba.

China previously had only two private banks, China Minsheng Bank (中國民生銀行) and Ping An Bank (平安銀行). Apart from the two announced yesterday it approved three in late July, to be based in Shenzhen, Tianjin and Wenzhou.

The approvals followed a declaration by the Chinese government in March that it would reform the banking sector, which is dominated by four state-owned banks — though all of them have minority shares listed on the stock market.

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