Authority approves private bank names

The State Administration for Industry and Commerce (SAIC). China's top business regulator, announced that it has approved the corporate names of two enterprises with plans to set up private banks, a move which follows recent government calls to open the industry to non-State competition.

Since last month, the SAIC has already certified the corporate names of three other private banking entities - including Sunan Bank, Huarui Bank Co Ltd and Suning Bank Co Ltd, the banking unit backed by China's leading appliance and home electronics retailer, Suning Commerce Group.

Experts contacted by the Global Times pointed out that these approvals mark only one step along the path toward possible entry into China's banking sector. Whether or not these businesses are able to get their banking operations off the ground was still seen as a matter of speculation given current regulatory gaps.

"The most important thing will be getting the nod from the China Banking Regulatory Commission (CBRC)." said Nie Riming, a research fellow at the Shanghai Institute of Finance and Law, in an interview with the Global Times Monday. Nie remarked that it could be a long time before any of these banks opens for business.

The expansion of China's financial sectors to include more privately-funded players has been a hot topic among investors over the past several weeks. News of the SAIC's latest round of approvals propelled shares of Suning ahead to the 10-percent daily limit Monday as many believed that the company may soon obtain a banking license from the CBRC.

According to data compiled by Wind, a data provider, Suning's market value has swelled by more than 11.74 billion yuan ($1.92 billion) over the past week, an increase which many attribute to the company's banking aspirations.

In total, 17 applications to establish private banking businesses have been submitted with relevant authorities, several of which have come from A-share listed enterprises, say local media reports.

As of yet, no finalized guidelines pertaining to the creation of private banks have been released, although draft policies had reportedly been submitted to the CBRC earlier this month for review.

Nie said the CBRC will probably be cautious with its next moves, with risk controls likely to be the main focus of consideration.

"Banking is the core in China's financial system, and it is critical to social stability. Before allowing private capital to engage in banking, regulators will need to fully assess the environment," Nie stated.