Newly listed Alibaba to apply to run internet bank

Want China Times, Staff Reporter 2014-09-20

The front desk of Alibaba's headquarters in Hangzhou, Sept. 15. (Photo/Xinhua)

Chinese internet company Alibaba, which went public on the New York Stock Exchange on Friday and saw its market value rise to US$231 billion on its first day of trading, will soon file an application to set up a micro-savings and micro-loans private bank, similar to its ongoing plan to set up a purely internet-based bank, the Beijing-based Economic Information Daily reports, citing an executive from the company.

China's top banking regulator, the China Banking Regulatory Commission (CBRC) announced on July 25 that it had approved the establishment of three private banks, though Alibaba's name did not figure among the approvals this time around.

During a company meeting in late August, Yu Shengfa, vice president of Alibaba's Microfinance Service Group, said this is because Alibaba has been proceeding with its bank building plan at its own pace and because the bank will offer some special services compared with the three other banks, requiring the company to devote more effort to improving and optimizing the plan.

Yu also said Alibaba has completed its plan for setting up the private bank and will soon submit its application to the CBRC, which is expected to make a final decision as to whether the application gains approval in late September.

Internet banking provides a comprehensive range of online transactions conducted entirely in online mode and without the need to establish offline physical banks.

China currently has no such banks and has no regulations governing this sector. The existing banking regulations require that banks should set up physical outlets, where customers can go to resolve any banking related issues.

Industry insiders are of the view that if Alibaba's internet bank is approved, relevant regulations will have to be amended and the regulator will need to consider how internet banks and traditional banks can be linked.

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