China sets up privately owned banks

• China will launch a trial programme for private firms to set up banks, the country's banking regulator said Tuesday, with Internet giants Tencent and Alibaba reportedly among the first applicants.
• Most Chinese lenders are state-controlled and banks founded by private companies are extremely rare, while access to lending is a key element of the Communist authorities' control of the economy.
• The first batch of the five banks will be opened in the cities of Tianjin, Shanghai, Zhejiang Province and Guangdong Province as a pilot project.
• Ten private companies’ viz. Internet giants Alibaba and Tencent have been selected to take part in the preparation work for setting up the banks.
• Each of the banks will be co-sponsored by at least two private capital providers
• The banks will operate “independently” and will assume responsibility for risks and losses as well as profits.
• The private banks will need to have adequate net capital, a specific business strategy and a mechanism to prevent risks from spreading and to protect depositors’ interests.
• Financial services of private banks will be oriented towards small and micro businesses as well as residential communities.
• No timetable has been given for when they need to be operationally ready.