China Mobile, SPD Bank to Cooperate on Mobile Remittance
Southern Metropolitan News, 11/30/10
China Mobile (NYSE: CHL; 0941.HK) chairman Wang Jianzhou said recently that the mobile operator will partner with Shanghai Pudong Development (SPD) Bank to promote a range of products including mobile wallets and mobile finance. The partnership could also cover charging and billing and mobile phone-based cash transfers, among other mobile payment functions. A source close to senior SPD Bank management said that promotion of mobile bank transfer services could leverage China Mobile's nationwide advantages in rural telephony services to make sending money home easier for migrant workers and other more mobile demographics. The bank declined to provide details of the service, citing the need to maintain commercial secrecy, but a banking analyst said that currently China Mobile and SPD would only be able to partner on a service whereby once a customer sent money through SPD, China Mobile would notify the recipient via SMS. The analyst said that current regulations stipulate that as a telecommunications operator, China Mobile may not involve itself in financial services like savings and payment remissions. China Mobile subscribers' mobile accounts generally contain small amounts of cash; were China Mobile able to resell insurance and financial products through its stores, it could find itself at odds with regulatory requirements, he said, whereas were it able to accept deposits and offer withdrawal services through ATM at its stores, there should be "basically no problem."
There are more than 100 mln rural migrant workers estimated to be working in Chinese cities at present. Every year, migrant workers send about RMB 1 trln back home to their families - mostly through the China Postal Savings Bank and the Agricultural Bank of China.
Editor's Note: China Mobile's Guangdong provincial branch acquired a stake in SPD Bank in mid-October, making China Mobile a shareholder. While the promise of being able to offer limited mobile financial services is potentially one reason for China Mobile taking a stake in SPD Bank, Marbridge Consulting has also noted that SPD's long-term capital plan in 2010 targeted a core capital adequacy ratio of 7% or more. The bank has seen 25% annual growth in risk-weighted assets, meaning it would need approximately RMB 20 bln in financing to achieve this goal. The investment by China Mobile, which had USD 46.79 bln in cash holdings in January 2011 according to the S&P Valuation and Risk Strategies research group, might be less for the benefit of China Mobile than to provide financial support to SPD Bank. For more background on this topic, please see "China Mobile, SPD Bank Partner on Mobile Payment" MD 11/26/10 issue.
Keywords: Shanghai Pudong Development Bank Wang Jianzhou China Mobile rural wireless mobile payment CHL 0941.HK
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