China will launch pilot programs 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 hitherto closely guarded banking sector to private investors.
An article appearing in the official party mouthpiece People’s Daily on Tuesday named companies that have been approved to participate in the pilot project, including e-commerce giants Alibaba (IPO-ALIB.N) and Tencent (0700.HK) – both of which have been competing to market high-yielding wealth management products online.
A total of 10 companies will participate in the pilot, the report said, adding that five privately owned banks will be approved as the first batch. It did not give names of these banks.
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 Management Co.
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