Alibaba and Tencent in China's pilot private bank scheme logo Alibaba is China's largest online shopping portal

Related Stories

Internet firms Alibaba and Tencent have been shortlisted as pioneers of a pilot scheme to set up private banks in China, as the country takes steps to open up its financial sector.

A total of ten companies have been selected to set up private banks.

The first five banks will be established in Tianjin, Shanghai as well as Zhejiang and Guangdong provinces.

No timetable has been given for when they need to be operationally ready.

The president of the China Banking Regulatory Commission (CBRC), Shang Fulin announced the initiative during a press conference, on the sidelines of the National People's Congress which is currently underway in the capital Beijing.

According to Chinese media each of the banks will be co-sponsored by at least two investors, although there were no details of how the ownership structure would work.

'A step forward'

Mr Shang added the private banks will be subject to the same regulation and supervision as existing commercial banks that are operating across China.

But the financial services of these private lenders will be geared towards servicing small and micro businesses, as well as residential communities.

Analysts have welcomed the move, marking it as a step forward for the world's second largest economy.

"A big problem of China's banking sector is that state-owned banks extend most of their lending to state-owned companies. It is very difficult for small and micro-sized companies and private firms to get a loan," said Shen Jianguang from Mizuho Securities.

Mr Shen also observed "this also will increase competition in the sector that has long been criticised as monopolised."

The reforms are an extension of plans which China's regulators announced last year - to allow the creation of privately financed banks to help make the Chinese economy more productive by giving market forces a bigger role.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories



  • Payton McKinnonLeft behind

    Why do so many children die in hot cars?

  • Dr Mahinder Watsa Dr Sex

    The wisecracking 90-year-old whose agony column is a cult hit

  • Agnes at her home in Chibombo, Zambia'I had no say'

    Zambian child bride tells of being forced to marry a stranger

  • Russian President Vladimir Putin (left) talks to Rosneft President Igor SechinTargeting the Kremlin

    Do Western sanctions hurt the Russian elite?

From BBC Capital


  • A Royal Opera House performanceThe Travel Show Watch

    How the cast at the Royal Opera House are suited and booted for their spectacular stage shows

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.