China's e-commerce giant Alibaba, which completed the world's largest initial public offering ever this month, has won approval from authorities in Beijing to establish a private bank as it diversify into financial services.
Alibaba, through its subsidiary Zhejiang Ant Small and Micro Financial Services Group Co, will hold 30 per cent of share capital of the new bank, the China Banking Regulatory Commission said.
Having its own commercial bank will afford Alibaba greater control over many of its key services, including online payment and wealth management products.
Alibaba is the latest company outside the financial sphere to win approval to start a bank in China. Beijing hopes private banks will help in its drive to open up the economy to more competition and get private capital to more parts of the economy.
Alibaba completed the biggest initial public offering ever this month by selling $25 billion of stock to investors keen to tap into the world's biggest pool of Internet users.
Shanghai JuneYao Group, the parent of Juneyao Airlines, also received regulatory approval to set up its own bank and will own a 30 per cent stake, according to the regulator.
The CBRC made public in March to create five privately owned banks focused on smaller businesses that have limited access to credit. On July 25, the CBRC approved the establishment of three private banks, including Webank, funded by Chinese Internet giant Tencent.
Currently, China has only one private bank in service, China Minsheng Bank, which was founded in 1996 in Beijing. Minsheng, listed in both Shanghai and Hong Kong, is the country's first national bank founded by private capital.