SHANGHAI: Shanghai’s first private bank has opened in the city’s free trade zone to serve small firms and tap financial reforms in the zone.
Shanghai Huarui Bank has received 10 billion yuan (US$1.6 billion) of interbank borrowing quota from a dozen policy and commercial banks, including China Development Bank, China Merchants Bank and Shanghai Pudong Development Bank.
“The bank targets to serve a niche market with an open mind to embrace all kinds of reforms including liberalized cross-border payment in the free trade zone, the ongoing opening of capital account, and incorporating finance and the Internet,” Ling Tao, chairman of Huarui Bank, said on Saturday.
“We will meet the funding needs of small and high-technology companies to support Shanghai’s economic upgrading agenda.”
Small businesses find it hard to borrow from large banks because of their size and lack of collateral. Setting up private banks is seen as an “ice-breaking” reform in the dismantling of the monopoly of state-owned banks, market observers said.
Huarui Bank said it will exempt small borrowers from account management fees and cut fees on other operations.
Registered in the FTZ’s Waigaoqiao area with a 3 billion yuan capital, Huarui Bank, which started trial operations in January, is one of the first three private banks approved by the China Banking Regulatory Commission last July.
Shanghai-based JuneYao holds 30 percent of the bank, and clothing company Metersbonwe owns 15 percent. Another 10 private firms hold the remainder.
