First batch of fully private banks to be set up under pilot scheme

Two private banks will possibly be launched in the second half of this year as the first batch of privately funded banks under a pilot program, Shanghai Securities News reported Wednesday, citing sources.

One of the banks will be set up in Beijing and the other in Wenzhou, East China's Zhejiang Province, where private economy is seeing rapid expansion, the sources said.

Chinese central government agencies ­including the State Council, People's Bank of China and China Banking Regulatory Commission (CBRC) have pushed forward reform of the country's financial institutions through permitting more private investment into the banking sector in the past two months.

The CBRC said at a work conference on July 31 that the private financial institutions need to operate at their own risk so as to avoid infringing on the interests of depositors, creditors and taxpayers.

The banking regulator will also issue rules for the private banks after the pilot period, it said at the conference.

The newspaper quoted sources as saying that the founders of the private banks need to assume unlimited responsibilities for the risks.

During the pilot period, these private banks would mainly support poorly funded domestic small-sized enterprises, which are major ­contributors to the country's economic growth and job creation.

In China, nearly all the banks are funded and run by the State.

Among the 17 national commercial lenders, only Minsheng Banking Corp is mostly funded by private capital and run independently, with the others being controlled by either the central government or local governments.