Tencent's headquarters at Nanshan Hi-Tech Industrial Park in the southern Chinese city of Shenzhen. File picture: Bobby Yip

Shanghai - Tencent was among companies approved by China’s banking regulator to establish three privately owned lenders as the government eases restrictions on the state-controlled banking industry.

The banks will be based in the cities of Shenzhen, Wenzhou and Tianjin, the China Banking Regulatory Commission said in a statement today.

The lenders will begin drafting corporate strategies, and selecting senior managers and board directors before opening officially, the statement showed.

The approvals are the latest step in a trial program the CBRC made public in March to create five privately owned banks focused on smaller businesses, most of which have little access to credit.

China’s President Xi Jinping is pushing reforms to loosen government controls in everything from energy pricing to banking.

The CBRC will continue to guide the two other private banks that were approved earlier, Shang Fulin, chairman of the regulator, said in the statement.

Tencent, Asia’s largest Internet company, will set up the bank in its homebase of Shenzhen with Baiyeyuan and Liye Group, according to today’s statement.

That bank will focus on consumers and smaller businesses, the statement showed.

The Internet company will own 30 percent of the lender, while Baiyeyuan and Liye will hold 20 percent each, a separate CBRC statement showed today.

Huabei Group and Maigou (Tianjin) Group will own a combined 38 percent of the bank in Tianjin specialized in corporate lending, the CBRC said.

Chint Group and Huafon will lead the establishment of a lender in Wenzhou catering to small firms and rural businesses.

Final Approval

After preparations are completed, the new banks will still need approval from their local CBRC branches before they can open officially, the regulator said.

Alibaba Group, which was among 10 companies named in March to participate in the trial, wasn’t included in today’s list.

The CBRC said it will expand the program at an appropriate time to allow more private capital into the financial industry.

Privately owned banks must have adequate net capital, a specific business strategy and a mechanism to prevent risks from spreading and to protect depositors’ interests, the CBRC’s Shang said in March.

They also need “living wills” designed to ensure an orderly wind-down if they go bankrupt, Shang said at the time. - Bloomberg News