The Financial Supervisory Commission (FSC) yesterday gave the green light for CTBC Bank Co Ltd (中國信託銀行) to form a consumer finance joint venture in China, after the bank applied for approval to invest 350 million yuan (US$55.4 million) in the venture, in which it is to hold a 35 percent stake.
“The consumer finance operation will help CTBC Bank gain access to an alternative demographic of potential clients in China, and help the company overcome difficulties in quickly expanding service locations and clientele, and apply its expertise in consumer financing there,” Banking Bureau Deputy Director-General Jean Chiu (邱淑貞) told a news conference in Taipei.
CTBC Financial Holding Co (中信金控), parent company of CTBC Bank, in May said that it planned to form a joint venture for consumer financing in China with three Chinese companies — Huishang Bank Corp Ltd (徽商銀行), Gome Holdings Group (國美控股集團) and Hefei Department Store Group Co Ltd (合肥百貨大樓集團) — to develop its unsecured personal loan business there.
It said at the time that the venture would have a paid-in capital of 1 billion yuan, with Huishang Bank and Gome Holdings each taking a 30 percent stake and Hefei Department Store holding the remaining 5 percent.
Chinese consumer finance companies provide lines of credit to consumers, with loans limited to less than 200,000 yuan, Chiu said.
The loans are not mortgaged or collateralized, but borrowers face annual interest rates ranging between 12 percent and 20 percent, she said.
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