BEIJING, (Xinhua) -- China's banking regulator gave the go-ahead on the setup of two more private banks on Monday, including MYbank which will be mainly funded by a micro-business financing company owned by Alibaba Chairman Jack Ma and his colleagues.
MYbank will be located in Hangzhou, capital of East China's Zhejiang Province, and the other private bank will be based in neighboring Shanghai, the China Banking Regulatory Commission (CBRC) said in two separate statements.
The CBRC requires them to be established within 6 months from Monday.
The approval of the private banks marks the Chinese government's latest efforts to deepen financial reform and support the country's small and micro-businesses.
Setting up private banks was written into a historic reform plan rolled out last November after a key plenum of the Communist Party of China Central Committee, in which the Party promised to further open up the banking sector.
FIVE PRIVATE BANKS
According to the CBRC statement, a 30-percent stake of MYbank will be funded by Zhejiang Ant Small and Micro Financial Services Company, which is owned by Alibaba Chairman Jack Ma and his colleagues.
The Shanghai-based conglomerate Fosun Group will contribute 25 percent of funding, and China's largest auto parts supplier, Wanxiang Group, will hold an 18-percent stake in MYbank.
The new Shanghai-based private bank doesn't have an official English name yet, but its Chinese name is Huarui.
It will have 30 percent funding from Juneyao Group, another Shanghai-based conglomerate, and 15 percent of its funding will come from Metersbonwe Group, a leading casual wear company in China.
Currently, China has only one private bank in service, China Minsheng Bank, which was founded in 1996 in Beijing. Listed in both Shanghai and Hong Kong, Minsheng is the country's first national bank founded by private capital.
The CBRC said in March this year that China will set up five private banks on a trial basis. Each of the banks will be co-sponsored by at least two private capital providers.
On July 25, the CBRC green-lighted the establishment of three private banks, including the Shenzhen-based Webank, funded by another Chinese Internet giant, Tencent.
The other two are located in Wenzhou, a vibrant private-sector hub in Zhejiang, and the northern municipality of Tianjin.
TARGETING SMALL BUSINESSES
Yu Shengfa, deputy CEO of Zhejiang Ant who is in charge of setting up the private bank, said MYbank will be an Internet-based commercial bank, using Internet technologies to provide online financial services for small- and micro-sized firms and individual consumers at e-commerce platforms.
MYbank is designed to focus on small banking businesses, with a sum of deposit no more than 200,000 yuan (32,520 U.S. dollars) and a loan worth no more than 5 million yuan, he told Xinhua.
Yu said Internet-focused MYbank may be similar to Tecent's Webank since both Alibaba and Tecent are Internet companies.
Yu also said the establishing of MYbank will benefit from years of operational experience of Aliloan, a small business lending service which is now part of Zhejiang Ant.
Aliloan has been providing financial services for small- and micro-sized companies on Alibaba's major platforms Taobao and Tmall, which control 80 percent of online retail sales in China.
Once in service, MYbank will be operating side by side with the Aliloan service, Yu said.
Analysts said the establishment of five private banks is set to increase competition in the banking sector and improve financial services for the country's weak links such as small business and agriculture.
Though China's overall money and credit supply is not low, small- and micro-sized enterprises still have difficulties accessing funds and face high financing costs.
Over the years, small- and micro-sized firms in China have lost in the race for loans against much stronger state-owned companies, and paid higher rates than their state peers.
Chinese leadership has repeatedly vowed support for small- and micro-businesses since they create more jobs for the country than state firms.
At the Summer Davos forum in Tianjin earlier this month, Premier Li Keqiang promised that the government will continue to ensure efficient use of both the existing and additional fiscal and financial resources and further scale up support for the real economy and micro-businesses, among others.