Fosun said to exit tie-up for private bank

The Fosun Group is reported to have withdrawn from a partnership with JuneYao Group to set up a private bank in Shanghai, amid speculation that Fosun was disadvantaged in a veiled contest for the control over the planned bank by JuneYao's new hire of a former senior central bank official.

Fosun pulled out of the deal as Ling Tao, a former deputy director at the Shanghai Headquarters of the People's Bank of China, joined JuneYao last month, news portal Thepaper.cn reported yesterday, citing unnamed sources. There were also differences in the proposal for the new bank's strategic direction.

Despite the partnership, both Fosun and JuneYao have been coveting the control over the planned lender. Ling's strong banking background is believed to give JuneYao an advantage.

Ling joined JuneYao one month before his retirement from the PBOC. Earlier media reports said he joined the company to become the chairman of the new private bank, which was proposed under a government trial that aims to open the sector wider to private capital.

Ten companies were approved by the State Council, China's Cabinet, earlier this year to set up five privately-owned banks.

In May, Shanghai's banking regulator said the first private bank would soon be set up in the Shanghai pilot free trade zone. Market watchers said Shanghai-based conglomerates Fosun and JuneYao would soon receive a green light.

Each private bank in the trail needs at least two initiators, said the China Banking Regulatory Commission. JuneYao needs to find Fosun's successor, which may be Shanghai Huafu Investment Co, the biggest shareholder of apparel producer and seller Metersbonwe.