* Bank regulator approves 10 firms for private bank pilot
* Move aims to channel more loans to small, private
* Five private banks planned, each with two joint investors
* Pilot will begin in four wealthy provinces
BEIJING, March 11 China will launch pilot
programmes testing the development of privately-owned banks in
Tianjin, Shanghai, Zhejiang and Guangdong, the country's bank
regulator Shang Fulin said on Tuesday.
The pilot, which was approved by China's government in
January, is the first tentative step by the country to open its
closely-guarded banking sector to private investors.
The China Banking Regulatory Commission named 10 companies
it has approved to participate in the pilot project. These
include e-commerce giants Alibaba and Tencent
Holdings Ltd - both of which are already competing
with banks for depositors by selling high-yielding wealth
management products online.
In the pilot, five banks will be established, each with two
companies as joint investors, the CBRC said.
The other private companies that CBRC approved are:
- auto parts manufacturer Wanxiang China Holdings Co Ltd
- airline operator JuneYao Group
- diversified conglomerate Fosun International Ltd
- Shenzhen Baiyetuan Investment Co Ltd, the largest
shareholder of Joincare Pharmaceutical Industry Group Co.
- Tianjin Shanghui Investment Co Ltd, a subsidiary of
pharmaceutical conglomerate Tasly Holding Group Co Ltd;
- copper materials producer Huabei Group
- power plant equipment producer Chint Group.
- petrochemical and plastics conglomerate Huafeng Group
AIDING SMALL FIRMS
Alibaba is applying for the licence through its affiliated
Small and Microfinancial Services Group, which includes online
payment unit Alipay as well as its shareholding in Alibaba's
micro-finance unit, Zhongan Insurance, and Tianhong Asset
"The Small and Micro Financial Services Group will apply for
the license together with China Wanxiang Holding Co. Ltd; we are
currently preparing the relevant application materials so have
no further information to share at this time," an Alibaba Small
and Micro Financial Services Group spokeswoman told Reuters via
Wanxiang Holdings is part of Hangzhou-based Wanxiang Group,
China's biggest auto parts company built by billionaire Lu
Tencent was not available for immediate comment.
Economists have long decried the tendency of China's
state-dominated banking system to grant loans primarily to large
state-owned firms, even as small- and medium-sized-enterprises
(SMEs) account for 60 percent of gross domestic product and
around 75 percent of new jobs.
But banks and officials warn that even if regulators move
aggressively to permit privately-owned banks, it won't provide
an immediate solution to SME financing.