Privately funded lender KinCheng Bank of Tianjin Co Ltd opened its doors for business on Monday, as China continues to press ahead with financial reforms on various fronts, including encouraging private investors to set up commercial banks.

Established in the newly approved Tianjin pilot free trade zone, KinCheng Bank is the fourth privately funded bank that opened for business in China, after WeBank in Shenzhen, Guangdong province, Huarui Bank in Shanghai and Wenzhou Minshang Bank in Zhejiang province.

Hu Bin, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences, said: "The opening of KinCheng Bank is part of the implementation of the financial reforms on opening the Chinese banking sector to private capital."

With registered capital of 3 billion yuan ($483.6 million), the bank was jointly founded by 16 private companies. Its two largest shareholders－copper material producer Huabei Group and Maigou (Tianjin) Group Co Ltd, which operates in commercial property, retail and finance－h(huán)old 20 percent and 18 percent of its stake respectively.

The bank will provide comprehensive financial services with a focus on corporate banking. It will mainly target medium-sized, small and micro companies and put emphasis on segment markets, such as auto manufacturing, healthcare and tourism.

Rooted in Tianjin, the lender will reach out to clients in the Beijing-Tianjin-Hebei region and Circum-Bohai Sea region at the same time as it deepens the local market, to promote coordinated development of the regions and the construction of the Tianjin pilot free trade zone.

Hu said: "As the Chinese economy has entered a 'new normal' stage of restructuring amid slower growth, privately funded banks will feel the pressure of an economic downturn, just like other commercial banks. So they must have differentiated business strategies to succeed as competition becomes intense.

"Private banks are on the right track toward offering better financial services to medium and small-sized companies. Although the general direction is the same for several lenders, they can still be different in terms of business models, services and products."

Hu urged the banking regulator to pay attention to potential liquidity risks of newly formed private banks and consider steps to protect them from narrowing profit margins due to interest rate liberalization. In addition, it is also important for the regulator to prevent the large shareholders from violating the benefits of small shareholders and depositors.

Guo Tianyong, a professor with the Central University of Finance and Economics and an independent board director of KinCheng Bank, said the lender will mainly focus on traditional corporate banking to serve medium-sized and small private companies. It will make a transition to retail banking and Internet finance gradually.

The bank's chairman Gao Degao is the former general manager of the Tianjin Branch of China Construction Bank Corp, the nation's second-largest lender by assets. Its president Wu Xiaoping is the former head of Shanghai Branch of China CITIC Bank Corp Ltd, a mid-sized joint-equity commercial lender.

Top executives of KinCheng Bank are confident that it will be able to get business quickly and not tread on the wrong path, thanks to their rich experience in the banking sector, Guo said.

Earlier this month, China officially launched three free trade zones in Tianjin, Guangdong province and Fujian province, in addition to the China (Shanghai) Pilot Free Trade Zone.

"Tianjin has the only free trade zone in the northern part of the country. It will have huge volumes of economic activities in trade and direct investment. KinCheng Bank will naturally serve companies in the zone with a flexible corporate governance mechanism," Guo said