China’s internet giant Tencent applies for private banking license

China’s Tencent applies for private banking license: media

4:02am EDT

BEIJING (Reuters) – Tencent Holdings Ltd (0700.HK: Quote,ProfileResearchStock Buzz), one of China’s biggest Internet companies with a market cap of almost $100 billion, has applied for a private banking license, Chinese media reported on Friday. The company, known for its wildly popular social messaging app WeChat and its lucrative online games, had its submission approved by provincial authorities in Guangdong, said the Southern Metropolis newspaper.The application will now be assessed by the China Banking Regulatory Commission (CBRC) before it can gain final approval, according to the report.

Tencent’s interest in private banking could tie into its Tenpay online payment system, which allows digital transactions for products like WeChat. The firm recently introduced free-to-play games and paid-for stickers to the app, in an effort to monetize its 236 million active users.

“Tencent probably wants to create an end-to-end system for their users, so they never have to leave the comfort and safety of the Tencent world,” said Frank Yu, a Beijing-based technology investment advisor and CEO of Kwestr. “There’s not really a lot of transaction volume on Tenpay, but they’re getting ready for it. WeChat will be a big source of transactions,” he said.

Neither Tencent nor CBRC officials were available for comment.

Competitor Alibaba Group ALIAB.UL, the Chinese e-commerce company whose coming IPO could value it at more than $100 billion, has also been moving into financial products.

It already offers loans to small business using its platforms and its AliPay payment system recently branched into offering money management products to users through Yu’ebao. This allows people to generate interest on money stored in their AliPay account through funds that have partnered with Alibaba.

The China Business Journal reported on Monday that Alibaba had applied for an online banking license, which if successful, would make it China’s first Internet bank, with a registered capital of 1 billion yuan ($163.45 million).

Alibaba officials declined to comment on what they called “rumors and speculation”.

In August China’s cabinet unveiled plans to set up more private banks to boost financial support for cash-starved smaller firms as state banks have channeled the bulk of their loans to state firms and local government vehicles.

Tencent shares hit an all-time high on Thursday, closing at HK$412.80 before falling to their current price of $409.20.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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