Citic, Baidu Get Green Light to Open Online Bank
(Beijing) — A partnership between China Citic Bank Corp. Ltd. and Baidu Inc. to establish an online bank has received regulatory approval, joining a slew of internet-based lenders intent on challenging the traditional banking sector.
The China Banking Regulatory Commission gave the go-ahead to the new Citic Baixin Bank Corp. Ltd., which will provide banking services without a brick-and-mortar facility, Citic Bank said in a statement on Thursday night.
The state-owned bank will hold a 70% stake in Baixin Bank, which amounts to 1.4 billion shares. Fujian Baidu Bo Rui Netcom Science and Technology Co. Ltd., a subsidiary of the search engine giant, will own the remaining 30%, which represents 600 million shares.
The two shareholders did not provide a timetable for the opening of the online bank.
The move follows similar steps by Baidu’s major competitors, Alibaba Group Holding Ltd. and Tencent Holdings Ltd. — the three together are known as BAT in China — and other private companies to alter the country’s banking landscape, posing regulatory challenges for policymakers.
In recent years, the Chinese government has gradually opened up the banking sector to private investments as part of its efforts to expand access to financial services for individuals and small-business owners.
The Tencent-backed Shenzhen Qianhai WeBank, the country’s first non-brick-and-mortar bank, opened in 2015. At its high-profile launch ceremony in January 2015, Premier Li Keqiang said that “WeBank’s one small step is one giant step for financial reform.”
A few months later, Ant Financial Services Group, controlled by Alibaba founder Jack Ma, also began operating MyBank.
The ultimate goal of online banks is to provide more convenient access to financial services for customers and lower the cost for themselves as lenders. However, Chinese banking regulators are reluctant to allow online banks to offer full services on their own out of concern that online banking carries more risks.
So far, most online bank services — like ATM withdrawals — have to be delivered through existing brick-and-mortar banks. To deposit and withdraw money from WeBank, users have to link a bank card issued by other banks to their WeBank account.
Traditional banks also are trying to get a toehold in the industry. Major lenders, including China Minsheng Banking Corp. and Industrial Bank Co., have started online banks without physical branches.
The Citic-Baidu partnership was first announced in November 2015. During the news conference, Citic Chairwoman Li Qingping said the online bank will combine Citic Bank’s advantages in risk control and product development with Baidu’s strength in big data to “help the public manage their wealth.”
Two senior executives at Citic Bank’s e-banking department, Li Rudong and Wang Junhui, will join the joint bank venture, according to a person close to Citic Bank.
Contact reporter Chen Na (email@example.com)
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