Alibaba wins licence for private bank in China

Chinese e-commerce company Alibaba Group has won approval from Chinas bank regulator to launch a private commercial bank in its home city of Hangzhou.

A financial arm of Alibaba will hold 30 per cent of the private bank in partnership with Fosun International, a large private conglomerate.

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AlibabaGroup Holdings raised $25 billionUS in itsIPOtwo weeks ago and is flush with cash. Its shares, sold initially for $68 US, opened trading at $92.70, but have since dropped back to the $90 range after short sellers moved into the market.

Alibaba already owns Alipay, a Paypal-like payments system that has helped it build online commerce in China. Its Taobao website links small businesses and merchants to millions of Chinese customers.

The bank will be called Zhejiang Internet Commerce Bank, whose Chinese name plays on the similar pronunciations of the two characters for online and commerce.

Fosun said the bank is geared toward investment and financing needs of micro-companies and individual consumers, which refer to deposit products under 200,000 renminbi ($36,000 Canadian) and loan products under five million renminbi ($900,000).

Alibaba rival Tencent Holdings was given permission to operate a bank in July and is offering investment products to consumers at better rates than they enjoy at state-owned banks.

The Alibaba financial affiliate is controlled by Alibaba executive chairman Jack Ma.