Internet search giant Baidu Inc. is teaming up with China Citic Bank Corp. Ltd. (00998.HK) to create an online bank, joining 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, it told Hong Kong’s stock exchange Wednesday.
The planned registered capital is 2 billion yuan (US$313 million). Regulatory approvals are still required.
The country’s biggest banks, such as Industrial & Commercial Bank of China Ltd. (01398.HK), are facing increasing competition, including from online ventures, Bloomberg reported.
More than 20 Chinese banks, including China Minsheng Banking Corp. Ltd. (01988.HK) and Industrial Bank Co., have started so-called direct banks, which operate online rather than through brick-and-mortar outlets, Grace Li, a Shanghai-based analyst at Ping An Securities, was quoted as saying.
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. (00700.HK) hold in their private banks, Li said in a note.
That should help to facilitate data sharing between Baidu and Citic Bank, she said.
Baidu has a mobile app that boasts 500 million users, and the app’s payment function has 45 million activated accounts, Li said.
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