Chinese retailer seeks to open bank

 

China’s biggest home-appliance retailer Suning is to apply for permission to launch a private bank, a move which could prove an important test case for the government’s efforts to encourage more private investment in the financial sector.

Beijing wants more private companies to enter the financial sector in order to break the near-monopoly of state-owned lenders.

Last month, the State Council, China’s cabinet, issued guidelines reaffirming the decision to allow private banks and held an executive meeting to discuss how to trial-launch privately run banks and financial agencies totally founded on private capital.

Then last month, an advisory document from the council also mentioned the trial plan.

“It will be another move by a privately owned enterprise to apply to enter the sector in an attempt to upgrade its company structure after several businessmen in Wenzhou, Zhejiang province, submitted such a proposal in 2011,” She Minhua, a banking analyst at Zhongde Securities, told China Daily.

Underground banks

Last year, the government gave private firms in Wenzhou, a highly entrepreneurial city in Zhejiang province, permission to set up lending businesses to try and stem underground banks, which were charging high interest rates to borrowers.

So far, the highest-profile companies to heed the call have been internet firms. JD.com, a leading home-appliance online vendor, launched a financial service platform to help suppliers get loans from participating banks.

And the e-commerce giant Alibaba is also entering the financial industry with new services by launching Alibaba Small and Micro Financial Services Group to consolidate its online payment and micro-loan businesses.