China’s antitrust watchdog fines Citic Bank, Baidu unit for failing to report digital bank venture

Citic Bank and a unit of tech giant Baidu were fined US$78,280 yuan each for violating anti-monopoly law

China’s antitrust watchdog fines Citic AiBank because the joint venture partners failed to disclose the formation in 2015

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The joint venture partners of Chinese online only bank, AiBank, have been fined by the country’s regulators. Photo:Weibo

Published: 7:50pm, 23 Nov 2021

China’s antitrust regulator has expanded its anti-monopoly crackdown to the banking sector, penalising the two shareholders of a digital bank 500,000 yuan (US$78,280) each for failing to report their joint venture ahead of its formation in 2015.

The State Administration for Market Regulation (SAMR) said on its website on the weekend that China Citic Bank and Fujian Baidu Bo Rui Netcom, which own 70 per cent and 30 per cent, respectively, of Citic AiBank, had violated the country’s anti-monopoly law. Fujian Baidu is controlled by Baidu, operator of mainland China’s dominant internet search engine.

AiBank, known for its use of artificial intelligence in delivering banking services thanks to its AI-focused shareholder Baidu, was launched in 2017.

AiBank is one of five digital banks in mainland China, representing a keenly watched market segment that has piqued the interest of foreign banks eyeing the country’s banking sector with assets of 339 trillion yuan.

Citic is the only state-owned backer of an online only bank in China. Photo: Costfoto/Barcroft Media via Getty Images

SAMR said the fine was the result of an investigation that started in August, but added that AiBank did not restrict or exclude competition in any way.

While the fine is small, it signifies the regulator’s determination to deter banking players cutting corners on compliance, said Wang Feng, chairman of Shanghai-based financial services provider Ye Lang Capital.