Private Bank Creation Set to Hit a New “Peak” in China: State Media

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Reports from state-owned media are flagging the further establishment of private banks in China.

The Chinese government is currently in the process of “systemically planning, researching and unveiling policy measures to drive the standardised growth of private banks” according to a report from Economic Information Daily.

In southern China Jiangxi Yumin Bank (江西裕民银行) is about to become the 18th private bank to commence operation in the country, while Henan Huamao Bank (河南华贸银行) hopes to obtain approval before the end of the year.

Industry observers say that Chinese regulators are giving private banks greater attention as a means of driving financial inclusion, and that China is probably about to see a “peak” in the establishment of private banks.

Private bank trials first commenced in 2014, with 17 licenses approved by the start of 2017.

During the two year period from 2017 to 2018 the Chinese government put a freeze on new licenses, however, which only broke in May of this year when Jiangxi Yumin Bank grabbed approval for establishment from the China Banking and Insurance Regulatory Commission (CBIRC).

“The slowdown in the establishment of private banks over the past two years is mainly related to deleveraging and the broader environment,” said Wang Changyun (汪昌云), head of the Hanqing Advanced Institute of Economics and Finance, Renmin University.

“At present one key work area in the financial sphere is supply-side structural reforms and the development of financial inclusion.

“As a major supplement for China’s financial system, private banks will also welcome new growth opportunities, and their volume is likely to see re-growth.”

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