China's first village bank for investment management gets nod from regulators
Changshu Rural Commercial Bank announced late Monday that it has been approved by the top banking regulator to establish China’s first village bank for investment management.
The bank, named XingFu Commercial Bank, will be located in Haikou, the capital of Hainan Province, the announcement said.
The move will help Changshu Rural Commercial Bank to more directly manage the village banks it has taken stakes in by leveraging the unique advantages of Hainan Province in building a free trade zone.
The permission will make it possible for XingFu Commercial Bank to carry out mergers and acquisitions of village lenders nationwide and break the geographical limitations for rural banks to expand their business.
At present, the Changshu-based rural lender has invested in 30 village banks in provinces such as Hubei, Jiangsu, Henan and Yunnan.
Village banks were originally intended to further the economic development of local counties. China now has more than 1,500 such small institutions throughout the country.
Last January, the former China Banking Regulatory Commission issued a notice which encouraged commercial lenders to set up, or choose an established rural bank they had invested in, as an investment management bank.
Since then, several banking institutions have announced plans to do so, including Bank of Beijing, Shanghai Pudong Development Bank and BOC Fullerton Community Bank, a joint-stock company by Bank of China and Singapore’s Fullerton Financial Holdings of Temasek.
So far, only Changshu Rural Commercial Bank has got the nod from the watchdog to prepare for implementation.
Changshu Rural Commercial Bank said last December that it planned to set up an investment management village bank with registered capital between 1 billion yuan (US$150 million) to 1.5 billion yuan, and would own no less than 90 percent of the new bank’s shares.