Industrial and Commercial Bank of China (ICBC) will restrict trade with Alibaba's online payment arm to one branch, the bank said on Tuesday, in the country's latest crackdown on a nascent online finance industry.
Alibaba Group's payment arm, Alipay, previously had contracts with numerous branches of ICBC for negotiated corporate deposits, and could place deposits with the branch offering the highest yield.
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Tuesday's move means ICBC branches will no longer compete to offer high yields on Alipay's deposits, hitting the online payment business's revenues from interest, and potentially setting a precedent for other banks to follow.
The clash between entrenched interests in China's traditional finance sector and its internet companies has escalated in recent weeks, with banks imposing limits on how much their customers can transfer to online finance services and the authorities looking into potentially heavy regulation.