Tencent this week officially launched WeBank, China's first online-only private bank, named after the company's popular WeChat messaging app. As the Financial Times reports, WeBank is the first institution to begin operations under a pilot program to expand private banking in China, where the vast majority of banks are state-owned. The Tencent-led joint venture was one of six banks to receive licenses from financial regulators last year, together with a bank affiliated with e-commerce giant Alibaba.
"one small step for WeBank, one giant step for financial reform."
The hope is that these newly-approved private lenders will make it easier for small companies to obtain loans. Small- and medium-sized businesses have become an important driver of economic growth in China, but many state-run banks still prefer loaning to larger companies. WeBank will have no physical branches in China, and it is expected that most loans will be under ¥1 million ($160,680). The company's first loan of ¥35,000 ($5,600) was executed by Chinese premier Li Keqiang this week during an opening ceremony at Shenzhen, though state media reports that operations will begin in full later this Spring.
"We will lower costs for and deliver practical benefits to small clients, while forcing traditional financial institutions to accelerate reforms," Li said at the ceremony. "It's one small step for WeBank, one giant step for financial reform."