China CITIC Bank Corp Ltd and Baidu Inc on Wednesday said they plan to set up a direct bank to capitalize on China’s booming online finance market, in the country’s first tie-up between an Internet firm and a lender.
CITIC and Internet search provider Baidu would initially invest 2 billion yuan ($313.34 million) in cash as registered capital for the venture, dubbed Baixin Bank, CITIC said separately late on Tuesday.
CITIC said without providing details that it would take a controlling stake in the direct bank, and that the partners are awaiting a direct banking license. A direct bank offers services over the Internet or telephone instead of through branches.
Baixin Bank would be the latest investment in Chinese online finance where technology giants, financial conglomerates as well as hundreds of startups are offering a range of financial products via the Internet and mobile devices.
Traditional lenders, led by Industrial and Commercial Bank of China Ltd , have responded by launching e-commerce platforms and moving financial services to mobile devices.
The latest partnership would combine CITIC’s financial products with Baidu’s massive online traffic data.
CITIC Chairman Chang Zhenming, in a joint statement on Wednesday, said Baixin Bank will “better meet the growing needs” for financial services from credit-starved small businesses.
Baixin Bank is “an entirely new model of ‘Internet + banking’,” Baidu Chairman and Chief Executive Robin Li said in the statement.
CITIC suspended trading of its Shanghai-listed shares on Monday pending an announcement. Trading resumed on Wednesday, with the stock rising as much as 4 percent.
Baidu’s New York-listed shares closed down 1 percent on Tuesday.
($1 = 6.3828 Chinese yuan renminbi)
(Editing by Christopher Cushing)