Business / Companies

CITIC to establish direct bank with Baidu

By Jiang Xueqing ( Updated: 2015-11-18 17:09

CITIC to establish direct bank with Baidu

Li Qingping (left), president of China CITIC Bank, and Zhang Yaqin (right), Baidu's president, shake hands on the ceremony of signing a strategic cooperation agreement to jointly launch a direct bank. [Photo provided to]

China CITIC Bank Corp Ltd announced on Wednesday that it joined China's dominant Internet search engine Baidu Inc to launch a direct bank to realize its strategic transformation.

The mid-sized commercial lender will hold a controlling interest in the direct bank, which will offer financial services remotely via online banking, with a registered capital of 2 billion yuan ($313.2 million).

Chang Zhenming, chairman of CITIC Group Corporation, parent company of China CITIC Bank, said, "Our bank will develop Internet finance to build differentiation advantage and use it as an important means of strategic transformation."

The bank looks forward to acquiring a vast pool of clients and increase online traffic through its cooperation with Baidu, apart from making a transition with reference to the operation model of the Internet giant, while giving full play to its own advantages in financial products and services.

Li Qingping, president of China CITIC Bank, described the new direct bank as "a cross-sector innovation combining the genes of the Internet and finance". She said it is a practical response to China's call for innovation and the 13th Five-Year Plan.

Premier Li Keqiang has introduced an "Internet Plus" plan to China to boost healthy development of the economy by integrating Internet technologies, such as cloud computing and big data, with traditional industries.

Robin Li, chairman and chief executive officer of Baidu, said, "It is the first time that a mainstream bank and a mainstream Internet company jointly set up a direct bank in China. Our cooperation with China CITIC Bank is neither a flash marriage nor a one night stand. It can be traced back to 2013."

The two sides will have deep cooperation on the design and integration of financial products. For instance, Baidu will create customer profiles according to the client's nature and preferences based on the collection of mass data.

"China's banking sector has arrived at a historical juncture and will be vitalized by the Internet," Li said.

Commercial banks are facing increasing pressure of slower profit growth and rising bad loans amid China's economic downturn and interest rate liberalization.

The outstanding nonperforming loans of commercial banks reached 1.19 trillion yuan as of Sept 30, increasing by 94.4 billion yuan from June 30. The average NPL ratio rose 9 basis points to 1.59 percent during the same period, according to the China Banking Regulatory Commission.

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