Internet giants Alibaba and Tencent are among the ten companies selected by China to set up private banks on a trial basis, country's banking regulator said on Tuesday. The move is part of ambitious reforms rolled out in November last year after a key plenum of the Communist Party of China Central Committee.
The first batch of the five banks will be opened in Tianjin, Shanghai, Zhejiang Province and Guangdong Province before the practice is extended to more places, said Shang Fulin, head of the China Banking Regulatory Commission (CBRC). Ten private companies, including Internet firms Alibaba and Tencent, have been selected to take part in the preparation work for setting up the banks, Shang said at a briefing on the sidelines of the annual parliamentary session.
Alibaba Group is one of the biggest e-commerce companies and Tencent Holdings ltd is China's most popular online games provider. Shang, however, did not provide a timetable for the launch of the banks. "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. Compared with existing commercial banks, the private banks will be subject to the same regulation and supervision, Shang was quoted by state-run Xinhua news agency as saying.
Financial services of private banks will be oriented towards small and micro businesses as well as residential communities, Shang said. The CBRC chief said their eligibility as shareholders will be subject to further examination. Each of the banks will be co-sponsored by at least two private capital providers, he said. He said risk monitoring will be strengthened and shareholders' behaviours will be regulated.
last year, regulators announced China would allow setting up of privately financed banks and allow market forces a bigger role to make its economy more productive. Chinese authorities are also deliberating to allow banks to decide the interest rates they pay depositors. Zhou Xiaochuan, China's central bank chief, said it may take two years to implement this key reform.