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August 4, 2009

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Risk pool to lend to online firms set up

THE Shanghai government yesterday teamed up with China Construction Bank and to jointly set up a risk pool of 60 million yuan (US$8.8 million) to nurture credit to online small and medium business.

The Shanghai branch of the China National Investment & Guaranty Co signed the deal with the Beijing-based bank and the Hangzhou-based online B2B marketplace on behalf of the Shanghai municipal government yesterday. Each party injected 20 million yuan to set up the risk pool.

The risk pool will help cover defaults linked to credit issued to SMEs doing business via

"The risk pool is expected to leverage credit of more than 3 billion yuan, or a maximum of close to 10 billion yuan," said the Shanghai Financial Services Office yesterday. "The amount can help meet demand for credit from up to 5,000 small business clients based on an average demand of 1.8 million yuan from a small business."

Credit guarantee

The China National Investment & Guaranty Co is a state-owned company focusing on credit guarantee.

The risk pool encourages banks to issue credit to smaller businesses, which find it difficult to get loans due to a lack of credit records and collateral. also benefits from the deal as its clients have access to credit.

The Shanghai branch of CCB yesterday lent a combined unsecured credit of 8 million yuan to four clients. The credit, without collateral, is given based on the clients' track records with Alibaba.

The Shanghai branch of CCB will also offer financial services to clients registered in the city. has nearly 50,000 Shanghai-registered clients in its e-banking database.

The three-party alliance follows the central government's call to boost credit to small business in China, especially after the global financial crisis broke. and CCB have similar deals with governments of Hangzhou and Zhejiang Province.



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