CreditEase-China Citic Bank deal to prevent illegal activities

Chinese leading peer-to-peer lending and wealth management company CreditEase Corp announced on Thursday that it has become the first in the sector to reach an agreement with a bank on fund settlement supervision, a move that is likely to prevent illegal activities.

P2P finance involves lending money to unrelated individuals, or peers, without the use of a traditional financial intermediary such as a bank.

CreditEase made a strategic cooperation with China Citic Bank on fund settlement supervision, which means the bank will supervise the whole processes of CreditEase's own funds as well as those financed on its platform for micro, small- and medium-sized firms.

"The cooperative pattern is innovative in China, which suits China's current financial market," said Tang Ning, founder and CEO of CreditEase. "It also can be easily copied by other industry players, so we hope it can prevent from illegal activities."

The two parties also reached cooperation in wealth management, big data and supply chain finance.

In China, there have been cases where some P2P lending platform companies financed funds from the public and disappeared.

Wang Yanxiu, an official at China Banking Regulatory Commission, said in August that out of about 1,200 Chinese P2P lending companies 150 disappeared, and every month six or seven are engaged in illegal activities.