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Private Capital Plays a Bigger Role in Wenzhou’s Banking Sector

private capital plays bigger role in wenzhou banking sector

Wenzhou’s private capital is gaining momentum in moving into the banking sector. As revealed by Wenzhou Branch of China Banking Regulatory Commission, Wenzhou’s private capital takes up a big share in the city’s commercial banks and new-type rural cooperatives.

From the year of 2003 on, a large amount of private capital has been attracted into various corporate financial institutions in Wenzhou, including Bank of Wenzhou, rural cooperatives, rural banks and rural mutual cooperatives etc.

Especially in Bank of Wenzhou, a big local player in the banking sector, private capital plays a significant role. In the year of 2002 when the bank started increasing its share capital, 23 private enterprises invested 467 million Yuan to become its shareholders. Up to the end of 2009, the bank’s total capitalization had reached 1.023 billion Yuan, among which the private capital took up a 60% share, amounting to 605 million Yuan. In 2011, Bank of Wenzhou expanded its total capitalization to 1.5 billion Yuan by issuing new shares to designated investors, 1.03 billion of which is of private capital, a 68.26% share. In October this year, the bank started its new share capital increase, expecting to place more than 300 million new shares. In addition, the bank schedules to issue another 700 million new shares to some designated investors nationwide. If all goes well, the proportion of the shares privately owned in the bank will come to 70% at the end of this year.

Meanwhile, rural cooperatives have also brought in more and more private capital. Up to the end of 2011, 11 rural cooperatives in Wenzhou have attracted 1,037 corporate shareholders, 90% of which are privately-owned enterprises, holding shares worth 730 million Yuan and accounting for 27.5% of the total capitalization. On the other hand, the rest shares are mostly owned by individuals, making private capital a dominant shareholder as a whole.

Along with the progress of the financial reform in Wenzhou’s rural areas, rural banks and rural mutual cooperatives have also expanded progressively. At present, the capitalization of 6 rural banks coming into business in Wenzhou totals 748 million Yuan, 444.5 million of which is invested by 87 privately-owned enterprises and accounts for 59.43% of the total. Also, one rural mutual cooperative has been open for business in Wenzhou with a total capitalization of 5 million Yuan, fully privately owned.

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