Expanding its current financial reforms, China for the first time approved the establishment of three private banks, including Webank by Internet giant Tencentm in a bid to shake up state dominated banking sector and step up financing to SMEs, the main stay of its exports.
Webank, located in the southern city of Shenzhen, will have two other main co-founders, Shenzhen Baiyeyuan Investment Co and Shenzhen Liye Group, Shang Fulin, Chairman of the China Banking Regulatory Commission at a work meeting today.
The bank will mainly serve individual customers and small and micro-businesses, state-run news agency Xinhua quoted him as saying.
The other two banks are located in the eastern city of Wenzhou and the northern municipality of Tianjin.
Chint Group and Huafon Group are co-founders of the bank in Wenzhou, which targets local small and micro companies, individual businesses and residents, as well as clients in rural areas.
The bank in Tianjin, with Huabei Group and Maigou (Tianjin) Group as co-founders, will mainly engage in corporate banking services, Shang said.
The permission to private Banks, the first in the highly dominated by the state banks, some of whom top the lists of major global banks came as part of government's economic and financial reforms to halt the slow down of Chinese economy which currently hover around 7.5 per cent compared to the double digit growths till 2010.
The main criticism against the state owned banks was that they were financing the big projects and provincial governments, squeezing credit to SMEs the main stay of China's exports for decades.
SMEs account for 60 per cent of gross domestic product and around 75 per cent of new jobs.
Economists say it is to be seen whether private banks would improve credit facilities to SMEs.
