Date
16 December 2017
China's central bank governor Zhou gestures as he speaks at a news conference as part of the NPC in Beijing

The Big Picture: DEPOSIT RATE LIBERALIZATION

China will free up deposit rates in one to two years, completing the rate liberalization process that was started in June 2012 to allow market forces play a bigger role in the system, central bank chief Zhou Xiaochuan {周小川} said on Tuesday.

Any new breed of financial services, including online money market funds such as Alibaba Group’s Yu’E Bao, will help promote the marketization of interest rates in China, he said at a media briefing in Beijing.

Zhou reiterated that interest rates will initially climb as controls are removed. There could be opportunities for people to chase higher returns but the market would balance itself out over the longer run, the People’s Bank of China (PBoC) governor added.

At the same briefing, China Banking Regulatory Commission Chairman Shang Fulin {尚福林} said banking risks are under control and that lenders have enough capital and provisions for non-performing loans.

With regard to renminbi internationalization, Zhou said it will take some time as the PBoC needs to lay the foundation through policies, legal framework and other operational issues. He said the yuan’s recent movement is reflecting the expanding role of market forces.

Market observers say Zhou’s comments about a fast pace of deposit rate liberalization will add to the pressure on Chinese banking stocks, which have already fallen significantly over the past few months. The weakening banking stocks could in turn drag the overall A-share markets in the short term. 

Five-year lock-up for founding stakes in private banks

The founders of a test batch of private banks will have to hold on to their stakes for at least five years to ensure ownership stability and sound operations, the China Securities Journal reported Wednesday, citing Yan Qingmin, vice chairman of the China Banking Regulatory Commission. The founding shareholders and their affiliated firms will also be “encouraged” to surrender the right to get loans from their banks. To protect depositors, the founders will have to promise to repay all of the deposits and other debts should their banks fail, the report said.

Alibaba buys controlling stake in ChinaVision Media for HK$6.24 bln

TV and film producer ChinaVision Media Group Ltd. (01060.HK) announced late Tuesday that Alibaba Investment Ltd. has agreed to acquire a 60 percent stake in the company for HK$6.24 billion (US$804.40 million) via subscription of new shares. The acquisition comes a month or so after Alibaba bought into content service provider CITIC 21CN (00241.HK). Alibaba Group chairman Jack Ma has said that culture, education and health care are three key components for the group’s growth.

–Contact HKEJ at [email protected]

AM/JP/RC

 

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