China will set up five private banks on a trial basis before the practice is extended to more places, the chief of the country's banking regulator said on Tuesday.
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The first batch of five banks will be in Tianjin, Shanghai, Zhejiang Province and Guangdong Province, according to Shang Fulin, head of the China Banking Regulatory Commission (CBRC), at a press conference on the sidelines of the annual parliamentary session.
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Ten private companies, including Internet firms Alibaba and Tencent, have been selected to take part in the preparation work for setting up the banks, said Shang.
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He said their eligibility as shareholders will be subject to further examination.
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Each of the banks will be co-sponsored by at least two private capital providers, he added.
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Shang did not provide a timetable for the launch of the banks, saying that they will be approved when "conditions are ripe."
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Setting up private banks in China was written into an ambitious reform package rolled out after a key plenum of the Communist Party of China Central Committee in November, representing further opening up of the country's banking sector.
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Compared with existing commercial banks, the private banks will be subject to the same regulation and supervision, according to the CBRC chief.
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But financial services of private banks will be oriented towards small and micro businesses as well as residential communities, Shang said.
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Risk monitoring will be strengthened and shareholders' behaviors will be regulated, he added.