Out-Law News | 29 Jul 2014 | 5:23 pm | 1 min. read
One of the new institutions will be Chinese internet provider Tencent’s ‘Webank’, to be based in the southern city of Shenzhen.
The chairman of the China Banking Regulatory Commission (CBRC), Shang Fulin, announced the move as part of efforts "to provide efficient and diversified financial services to the real economy”, Xinhua said.
Webank’s two other “main co-founders” will be Shenzhen Baiyeyuan Investment Co and Shenzhen Liye Group. The CBRC said the bank will mainly serve individual customers and small and micro-businesses.
The other two banks are in the eastern city of Wenzhou and the northern municipality of Tianjin. The bank in Tianjin, with Huabei Group and Maigou (Tianjin) Group as co-founders, will mainly engage in corporate banking services, Xinhua said. Chint Group and Huafon Group are co-founders of the bank in Wenzhou, which targets local small and micro companies, individual businesses and residents and clients in rural areas.
The CBRC is also working with “related capital providers” to plan for the launch of a further two private banks, Xinhua said.
Authorisation of the new banks “will increase competition in the banking sector and improve financial services to the country's weak links such as the agriculture sector and small businesses”, Xinhua said. “Although China's overall money and credit supply is not low, companies still have difficulties accessing funds and face high financing costs.”
According to Xinhua, Chinese premier Li Keqiang said this month that the government's administrative reforms, including one introduced in February 2014 that seeks to simplify business registration and ease market access, “has seen a surge of newly registered companies”.
Xinhua said 1.68 million businesses were registered nationwide in the first half of 2014, which was an increase of 57% year on year. Of these, 1.58 million were private businesses which together provided around 10 million jobs.
In its annual report for 2013, the CBRC said there were 3,949 banking institutions in the country. CBRC pledged initiatives during 2014 to “deepen banking reform, open up and improve financial services and prevent financial risks, so as to continuously improve banking efficiency and service capacity”.
Other priorities for 2014 identified by the CBRC included better governance and risk management systems for the sector, measures to tackle risks associated with local government financing vehicles and property loans, and more support for the Shanghai free trade zone, which was established in September 2013.