Alibaba allowed to set up private bank in China

Alibaba Group Holding Ltd, the financial affiliate of e-commerce giant Alibaba has won approval from Chinese authorities to establish a privately owned bank, regulators said on Monday, allowing the e-commerce giant to diversify into financial services.

Alibaba, which completed the world's largest initial public offering ever this month, will hold 30 per cent in the capital of the new bank through its subsidiary Zhejiang Ant Small and Micro Financial Services Group Co, the China Banking Regulatory Commission said.

Separately, JuneYao Group Co and Shanghai Metersbonwe Fashion and Accessories Co won approval to set up a bank in Shanghai, the CBRC said on Monday. JuneYao will own a 30 per cent stake and Shanghai Metersbonwe will hold 15 per cent, according to a statement on the regulator's website.

After preparations are completed, the new banks will still need approval from their local CBRC branches before they can open, the regulator said.

Alibaba's Zhejiang Ant Small and Micro Financial Services Group Co Ltd affiliate will own 30 per cent of the lender, and a Fosun Group subsidiary will hold 25 per cent, according to the statement.

Zhejiang Ant Small, which is controlled by Alibaba's billionaire chairman Jack Ma, already owns a small-business lender, a money-market fund known as Yu'E Bao, and a Paypal-like service called Alipay.

Having its own commercial bank will give Alibaba greater control over many of its key services, including online payment and wealth management products.

Alibaba is the latest company outside the financial sphere to win approval to start a bank in China. Beijing hopes private banks will help in its drive to open up the economy to more competition and get private capital to more parts of the economy.

Alibaba completed the biggest initial public offering ever this month by selling $25 billion of stock to investors keen to tap into the world's biggest pool of Internet users.

Shanghai JuneYao Group, the parent of Juneyao Airlines, also received regulatory approval to set up its own bank and will own a 30 per cent stake, according to the regulator.

The CBRC made public in March to create five privately owned banks focused on smaller businesses that have limited access to credit.

On 25 July, the CBRC approved the establishment of three private banks, including Webank, funded by Chinese Internet giant Tencent.

Currently, China has only one private bank in service, China Minsheng Bank, which was founded in 1996 in Beijing.

Minsheng, listed in both Shanghai and Hong Kong, is the country's first national bank founded by private capital.