WeBank swung from breaking even in calendar 2017 to reporting a first-half net profit of $US160 million in October. The company boasts a hefty net interest margin of 7 per cent.
WeBank is 30 per cent owned by Chinese internet giant Tencent, which has a market capitalisation of $US394 billion, about double the size of the big four banks combined. Tencent’s messaging app WeChat, which is optimised for WeBank users, has more than 1 billion monthly users.
The trademark applications followed a lightning visit from Tencent executives during a roadshow last month organised by Macquarie. Tencent executives met fund managers with global mandates in Melbourne and Sydney to update them on its forecasts and plans for the year.
Tencent and WeBank did not respond to questions from The Australian Financial Review before deadline.
However, Tencent and WeBank’s attempts to shake up the market in Australia may be thwarted, at least in the short term, by the Australian Prudential Regulation Authority.
Companies are prevented from promoting themselves using the word “bank” under sections 66 and 66A of the Banking Act of 1959 unless they are an authorised deposit taking institution or have permission from APRA.
It has been speculated that Tencent and WeBank are looking to ramp up operations in Australia quickly to offset the progress made by rival payments company Alipay.
Alipay was spun out of online retailer and commerce company Alibaba, which is the same size as Tencent. Alipay is now held by private company Ant Financial, which has been valued at up to $US150 billion. Both WeBank and Alipay are expected to list in 2019.
Late last year, the National Australia Bank allowed Australian merchants to offer Chinese customers the ability to use Alipay on its terminals. The deal was aimed at capturing more of the $11 billion spent in Australia by 1.4 million Chinese tourists each year.
The news of a new competitor follows Tuesday’s announcement that digital bank Volt would be awarded an unrestricted banking licence.
In May last year, Volt was the first digital Australian bank to be granted a restricted licence. Xinja was the second bank to do so, its licence granted in last month. Rivals 86400 and Judo Capital are expected to follow soon, adding to the competition in a concentrated market.
News that a well-resourced and nimble foreign player has its eyes on the Australian market has arrived at an unwelcome time for the incumbent banks, which are keenly awaiting the final report and recommendations from Commissioner Hayne on February 1.
The cosy oligopoly enjoyed by the big four has been a longstanding feature of the Australian banking market, a situation that has both contributed to its financial stability and reduced competition, according to APRA and the Australian Competition and Consumer Commission respectively.
The ACCC has called out the major players for “synchronised pricing behaviour” on several occasions, with chairman Rod Sims saying more needed to be done to encourage smaller banks and to potentially review regulation which gave larger banks a competitive advantage.
from Just News Viral http://bit.ly/2UfEnfL
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