An online only bank is set to begin operations in China after receiving the approval of shareholders and regulators. Sichuan XW Bank will be backed buy Xiaomi Inc, who are achieving an extremely diversified portfolio at this point.
Sichuan XW Bank is only one of a handful of new banks that were created to appeal to small- and medium-based enterprises. These smaller banks, that only operate online, are not controlled by the government; giving them greater freedom in offering loans to the underserved SME sector in China.
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Both Tencent Holdings Ltd and Alibaba Group Holdings Ltd have also invested in similar banks, which shows their growing appeal to technology companies. Xiaomi, to its credit, has been heavily investing in Chinese startups to build a larger eco-system. Having access to financial services could go a great way to enhancing that eco-system with payment services.
Xiaomi currently holds 30 percent of the new venture, although it doesn’t have a controlling stake. Its partners Chengdu Hongqi Chain and New Hope Group own 15 and 30 percent, respectively.
[Source: Reuters]
