New | China's privately owned banks: boom or bunk?
Forty companies want to open their own banks, but analysts say few of them have the know-how needed to shake up the sector
Chemical factories and airlines are lining up to become the next big thing in the mainland's financial sector: privately owned banks.
About 40 companies have applied to open their own banks, according to a recent statement from the country's top bank regulator. The fervour follows the high-profile launch of MYbank by Alibaba Group Holding and WeBank by Tencent Holdings, the guiding stars of the impending private bank boom.
Five banks were approved late last year and five more were in the last stages of approval in what has been called one of the biggest regulatory shifts in the mainland banking sector in decades.
The problem with the pomp surrounding the reform is, with the exception of WeBank and MYbank, few of the companies behind the banks have the business models or the know-how needed to shake up the sector.
Some of the entrants will be fish out of water in the balance-sheet business.
"Most of the applicants do not have the experience nor the plan to be successful in this business and are nowhere near Alibaba and Tencent in terms of readiness," said Mukul Agrawal, the Asia director of core banking and digital channels at financial software firm Misys.