Alibaba Group Holding Limited (NYSE:BABA) Gets Approval for Private Bank

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By Erik Waters on September 29, 2014 Company

Alibaba Group Holding Ltd (NYSE:BABA) was organized in 1999, when the founder of Alibab.com, Jack Ma, connected overseas buyers with Chinese manufacturers. The company mainly operates in the People’s Republic of China, and during the year 2013, two of Alibaba Group Holding Ltd (NYSE:BABA) portals handled more than $170 billion in sales. As of September 19, 2014, the market value of Alibaba Group Holding Ltd (NYSE: BABA) was estimated at over 230 billion U.S. dollars.

Alibaba Group Holding Ltd (NYSE:BABA) has been granted approval by the Chinese government to set up a private bank. This is one step closer for the company to shine in the financial sector.

An affiliate of Alibaba Group Holding Ltd (NYSE:BABA), Zhejiang Ant Small & Micro Financial Services Group, will hold 30% stake in the bank, and a variety of other partners will hold the remainder of the bank.

The remaining stakeholders include Shanghai Fosun Industrial that is hold 25%; Ningbo Jinrun Asset Management will own 16% and Wanxiang Group will be in possession of 18% of the bank.

A parent company of Juneyao Airlines, known as Shanghai JuneYao Group Co Ltd, has also received approval to set up their own bank. This bank plans to offer financial services, such as: investments, trading and settlement services. In addition, they plan to explore the possibility of offering problem solving services to small and mid-size companies.

Wang Junjin, a chairman for Juneyao Airlines, said that its’ goal is to stimulate the market and create a healthy competition for privately-owned banks.

The stakeholders for Juneyao’s bank, which will be based in Shanghai, China, include Shanghai Metersbonwe Fashion & Accessories Co Ltd holding 15% and the other stakeholders will hold no more than 10% each in the new bank.

This new batch of privately-owned banks is part of a program that was launched within in the last nine months, and it is a way for the country to open up the banking sector to private investors.

A spokeswomen representing Alibaba Group Holding Ltd (NYSE:BABA) said in a written statement, that they will continue to serve the financial needs of smaller enterprises, as well as individuals by leveraging the technology of the internet and the data analysis, in order to fulfill the requirements and time frame set forth.

Although these companies were one of the first private firms to submit their application for a private banking licenses they are not the first to be approved. Just a few short months ago, July 2014, China approved three private sector banks, including one that is backed by Tencent Holding, LTD, a rival of Alibaba Group Holding Ltd (NYSE:BABA).

The banks should take another six months to be completely set up, and they will also need to apply for licenses before they can fully start operating.

Alibaba Group Holding Ltd (NYSE:BABA) opened today at 89.62 and at 10:00 am EST it is holding at 88.30. The market cap is 219.43 B with a 52 week range of 88.96 to 89.70.