* Baidu plans to do more than sell money market funds,
including online payment
* Internet will topple traditional finance - CEO
* Govt will promote healthy development of Internet banking
- Premier Li
BEIJING, March 7 Baidu Inc has formed a
partnership to apply for a private banking license, as China's
biggest search engine provider moves from acting as a store
front for money market funds to a certified financial
Baidu and other Chinese Internet companies such as Tencent
Holdings Ltd and Alibaba Group Holding Ltd
have offered wealth management products since last
They have attracted millions of investors thanks to interest
rates on consumer deposits that are higher than those offered by
banks, which are subject to a cap of 3.3 percent for one-year
"Of the businesses the Internet will topple they naturally
include finance," Chief Executive Robin Li said on the sidelines
of China's annual parliament on Friday.
"Baidu is now applying for multiple banking licences,
including payment, but because we're still in the process of
applying it's not convenient to reveal too much," Li told a
group of reporters.
Official control of interest rates has left commercial banks
offering slim pickings for individual depositors, with yields of
most savings products barely matching inflation. That is
changing as the government liberalises interest rates and as
online savings products compete with higher returns.
"What Baidu does at the moment is market financial products.
This is just a more convenient way of selling currently
available financial products to an audience," said Li.
E-commerce leader Alibaba kick-started China's online
finance industry with the high-yield Yu'e Bao money market fund,
which has amassed 400 billion yuan ($65.38 billion) in assets
under management in less than eight months, according to the
official Shanghai Securities News.
Baidu and social networker Tencent followed suit, drawing
the ire of China's banks who are lobbying to introduce curbs on
the growth of online funds offered by non-banks.
State broadcaster CCTV dubbed Yu'e Bao a "vampire", accusing
it of sucking the life out of China's banks.
Non-finance Internet firms offer such products online
through partnerships with fund managers such as Tianhong Asset
Management Co Ltd, of which Alibaba has applied to buy 51
Three state-owned banks have since halted interbank deposit
transactions with Tianhong, citing high costs, the official
Xinhua news agency reported on Thursday, citing an anonymous
A spokeswoman for Tianhong told Xinhua the fund is in
contact with over 170 banks in China each day and is unaffected
by the halt.
Premier Li Keqiang threw the government's support behind
online finance in his opening address to parliament on Wednesday
but said the industry needs to be closely watched.
"We will promote the healthy development of Internet
banking, improve the mechanism for coordinating financial
oversight, keep a close watch on the cross-border flow of
capital, and ensure that no systemic or regional financial risks
occur," Premier Li said.
Baidu's Li previously said that online finance needs greater
regulation as Internet companies are not finance experts, adding
that lack of oversight increases risk, according to a Xinhua
report on Monday.