Business / Markets

Zhejiang to deliver new style of banking

By Zheng Yangpeng (China Daily) Updated: 2014-03-11 08:58

Provincial government awaits final regulatory go-ahead

The nation's first privately sponsored banks in 18 years could be born in Zhejiang province, a sign of the government's increasing willingness to allow private capital to play a role in the State-dominated sector, according to a number of officials and business executives.

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You Xiaoping, chairman of Huafeng Group Co Ltd, a Wenzhou-based chemical materials provider, told China Daily that his company has joined with other local entrepreneurs to file an application to launch a private bank.

The application has been approved by the provincial government and is awaiting final approval from the China Banking Regulatory Commission.

Wenzhou Mayor Chen Jinbiao said the application has been sent to the CBRC, although there isn't any timetable for final approval.

Citing people familiar with the matter, website Aastocks, a Hong Kong-based financial information and analysis provider, reported last week there are four probable candidates for the first round of private bank trials.

Zhejiang province has two cadidates: the group that Huafeng joined and a Web-based bank with investment from Alibaba Group Holding Ltd.

Regulators haven't approved the establishment of a private bank since 1996, when China Minsheng Banking Corp Ltd was founded. The government has only allowed small amounts of private capital to be invested in minority shares in commercial banks.

China has five State-owned commercial banks, three policy banks, 12 joint-stock banks, 144 city commercial banks and numerous banks in towns and rural areas. But private small businesses have complained for years that it's next to impossible for them to get loans from these banks, which prefer large State-owned corporations.

Allowing the formation of new private banks is also in line with the government's reform package, which aims to introduce more competition and open more State-dominated sectors to private investors, which have complained for years of being barred from lucrative sectors such as finance.

"The establishment of private banks is just a matter of time, hopefully within this year. It will be a big boost for the improvement of the national financial system," said Mei Xingbao, an external auditor of Bank of China Ltd.

Zhejiang to deliver new style of banking

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