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Shanghai private bank focuses on technology startups

Updated: 2016-06-01

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The Huarui Bank, the city of Shanghai's first private bank, wants to stand out in helping technology startups over the next 3 to 5 years, according to Zhu Tao, its president.

Zhu explains that this comes in response to new guidelines from the China Banking Regulatory Commission, announced on April 20, allowing commercial banks to experiment with venture loans and subsidiaries in equity investment.

And, Huarui was one of the first group of pilot banks and it says that it has its strengths, as it has worked with investment institutions in trying out venture loans before. And its proposal to set up an equity investment subsidiary has been approved by its board, according to Zhu, who saw this new way as a profitable one.

Zhu goes on to explain that the bank differs from traditional commercial banks in targetting technology startups, although they can increase the risk of lending. So, to lower the risk, they combine assessment of banks and investment institutions and have developed an electronic fund tracking system to judge the target company's performances, and sign an share option agreement with the borrower.