A financial affiliate of Alibaba received a licence to open a private bank on Monday, one of two licences granted by China’s bank regulator as part of a broader effort to increase competition in a state-dominated banking sector.
Alibaba will be partnering with Fosun International to open Zhejiang Internet Commerce Bank in the prosperous east coast city of Hangzhou, where the e-commerce group has its headquarters.
The bank “will mainly satisfy the investment and financing needs of micro-companies and individual consumers, which refer to deposit products under Rmb200,000 ($32,500) and loan products under Rmb5mn,” Fosun, one of China’s largest private conglomerates, said in a statement.
The Chinese banking system is dominated by large, state-owned institutions, banks which often favour lending to fellow large, state-owned businesses. Smaller companies are often unable to get a loan towards starting or maintaining their business ventures. Many hope that an influx of private banks will be able to meet this need, and Alibaba is only the latest private company to open an independent bank.
Rival Tencent Holdings was got permission to open a bank in July. Two other investor groups were approved to launch banks in the metropolis of Tianjin and Wenzhou, the coastal city famous for its active grey-market lending networks.
The CBRC also said Monday that it had approved the establishment of a private bank by Juneyao Group, which controls Shanghai-based Juneyao Airlines. Juneyao Group will take a 30 per cent stake in the bank.
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