Baidu Teams With Citic Bank to Join China's Online Banking WaveBloomberg News
Citic Bank will hold controlling stake in planned venture
Plan for Baixin Bank still needs approvals from regulators
Baidu Inc., the Chinese Internet search company, is teaming up with China Citic Bank Corp. to join the wave of online lenders altering a financial industry traditionally dominated by the big state banks.
Citic Bank will own a controlling stake in the planned Baixin Bank Co., with exact shareholdings yet to be determined, the lender told Hong Kong’s stock exchange on Wednesday. The planned registered capital is 2 billion yuan ($313 million) with regulatory approvals still required.
Citic Bank’s shares jumped 2 percent as of 9:36 a.m. in Hong Kong, compared with a 0.1 percent gain in the benchmark Hang Seng Index.
The nation’s biggest lenders, such as Industrial & Commercial Bank of China Ltd., are facing increasing competition, including from online ventures. The government is pulling apart restrictions such as interest-rate controls that protected banks’ margins and allowing more private money to trickle into a mostly state-controlled industry.
More than 20 Chinese banks, including China Minsheng Banking Corp. and Industrial Bank Co. have started so-called direct banks, which operate online rather than through brick-and-mortar outlets, according to Grace Li, a Shanghai-based analyst at Ping An Securities Co. Wealth-management products are among the offerings of such lenders.
Baidu is likely to take a bigger stake in the planned venture with Citic Bank than fellow Internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. hold in their private banks, according to Li’s comments in a note. That should help to facilitate data sharing between Baidu and Citic Bank, she said.
Baidu has a mobile application that boasts 500 million users and the application’s payment function has 45 million activated accounts, according to Li.
— With assistance by Jun Luo, and Aipeng Soo