Wenzhou-based private commercial bank could launch soon – state backed paper
If approved next month, it would be the first private bank to open on the mainland since China Minsheng Bank started operating in 1996
A Wenzhou-based private commercial bank could launch before the end of the year, according to a financial newspaper that quoted anonymous sources.
Preparations were moving quicker than expected at Wenzhou Minshang Bank and the lender could open for business by the end of next month, the said.
Tencent Holdings' Shenzhen Qianhai Weizhong Bank (WeBank) was in the process of applying to launch, it said, but quoted a company insider as saying the bank, based in a special economic zone in Shenzhen, was unlikely to open soon.
The two banks, along with Tianjin Jincheng Bank, received approval from the China Banking Regulatory Commission in July. At the time, they were given a six-month window to apply for the formal launch of operations.
Since then, the CBRC has also given e-commerce giant Alibaba Group Holding approval to open a bank in Hangzhou and cleared the way for conglomerate Juneyao and garment brand Metersbonwe Fashion & Accessories to establish a lender in Shanghai.
If approved next month, Wenzhou Minshang would be the first private bank to launch on the mainland since China Minsheng Banking Corp opened in 1996.
Chint, a manufacturer of electrical industry equipment, and polyurethane producer Huafon have backed the bank in a region known as the cradle of entrepreneurialism on the mainland.
In March, the regulator said 10 private companies had been included in a private banking pilot programme approved by the central government in January.
Regulators in Beijing hope that more private participation in the banking sector will increase access to credit at small and medium-sized enterprises, which struggle to borrow from the formal sector and instead seek higher-interest loans from peer-to-peer platforms or other unregulated lenders.
Tencent's foray into the balance-sheet business should help it compete with internet rivals such as Alibaba, analysts said.
The Shenzhen-based company has pushed aggressively into the payments and logistics sectors through acquisitions this year.
Logistics property firm China South City Holdings, in which Tencent bought an 11.6 per cent stake in January, told reporters in Hong Kong yesterday it planned to expand into SME lending after it acquired a stake in a business-to-business e-commerce platform in September.
Formal SME banking through the banks that Tencent and Alibaba would set up was expected to be yet another space in which the two companies would compete head to head, analysts said.
"Both banks will be facing the same customers: SME and consumer lending. It's certain they will compete," said Ma Tao, of Analysys International.
The firms have fought fiercely over the past two years to capture market share in the mainland's rapidly growing mobile commerce market. Last year, both companies paid out tens of millions of dollars in subsidies for taxi fares through competing mobile applications that reserved cabs - a bid to get users to connect their bank accounts to the firms' mobile platforms.
