China Mobile plans to purchase a 20% stake in Shanghai Pudong Development Bank for 39.8 billion yuan (US$5.7 billion or 4.2 billion euros) as part of its plans to develop a mobile-payment system in the country, China Mobile announced on March 10.
China's largest mobile network carrier did not disclose when it would complete the deal. But during the ongoing National People's Congress, China Mobile Chairman Wang Jianzhou emphasized the company will not participate in the bank's daily operations; the deal would focus solely in mobile banking and mobile commerce.
Both parties should benefit from the acquisition, contends Li Wei (Li is the family name), an analyst at Beijing-based research firm Analysys International, tells PaymentsSource. China Mobile will be able to use Shanghai Pudong Development's existing banking services, including clearing services and account management, while the bank will get a large investment and the opportunity to diversify its businesses, Li says.
As a network operator, China Mobile would have had to get government approval to offer financial services on its own, according to Li. But because the banking business is not what China Mobile specializes in, investing in a bank was the better choice, Li says.
As of the end of January, 527 million users had registered with China Mobile, or 70.5% of the nation's 747 million mobile users, according to the Ministry of Industry and Information Technology of China.