China’s central bank said it asked the country’s payments giant Ant Group Co Ltd to shake up its loans and other consumer credit operations, the latest blow to its billionaire founder and majority shareholder Jack Ma.
The announcement came more than a month after Chinese regulators abruptly suspended Ant’s successful initial $ 37 billion public offering in Shanghai and Hong Kong and just days after the country’s antitrust authorities said they have launched an investigation into Ma’s e-commerce conglomerate, Alibaba Group Holding Ltd.
Chinese regulators and Communist Party officials have come to grips with Ma’s vast financial empire after he publicly criticized the country’s regulatory system in October for stifling innovation.
Regulators have urged Ant to rectify violations of financial regulations, including in its credit, insurance and wealth management businesses, and to review its credit rating business to protect personal information, the report said on Sunday. Vice Governor of the People’s Bank of China (PBOC), Pan Gongsheng.
Pan’s comments stopped before calling for Ant’s disbandment, but pointed to a significant operational restructuring. Ant should create a separate holding company to ensure capital adequacy and regulatory compliance, Pan said.
Ant should also be fully licensed to operate his personal credit business and be more transparent about his payment transactions with third parties and not engage in unfair competition, Pan added.
The Hangzhou-based company must now move forward with establishing a separate financial holding company to ensure it has sufficient capital and protect private personal data, the central bank said.
Ant said in a statement he would establish a “rectification” working group and fully implement regulatory requirements.
The series of executive orders pose a serious threat to the expansion of Ma’s online finance empire, which has grown rapidly from a PayPal-like operation to a full range of services over the past 17 years.
Before regulators stepped in, Ant’s public listing would have valued it at over $ 300 billion, with existing backers including US private equity firms Carlyle Group Inc and Silver Lake Management LLC.
“This is the culmination of a series of regulations and sets the direction for the future of Ant’s business,” Zhang Xiaoxi, a Beijing-based analyst at Gavekal Dragonomics, told Bloomberg News Agency. “We haven’t seen any clear indication of a break yet. Ant is a giant player in the world and any breakup should be careful. “
The Chinese government has advised Ma to stay in the country, Bloomberg reported, citing someone familiar with the matter. Ma could not be reached for comment, Reuters news agency said.
Pan said representatives for Ant met with officials from the PBOC and other Chinese banking, securities and currency regulators on Saturday.
Defiance of regulations
During the meeting, regulators highlighted Ant’s problems, including poor corporate governance, disregard for regulatory requirements, use of its market advantage to oust competitors and harm consumers’ legal interests. , according to Pan.
The central bank said Ant used his dominance to shut out rivals, harming the interests of his hundreds of millions of consumers.
Ant traces its beginnings to Alipay, which launched in 2004 as a payment service and is 33% owned by Alibaba. Its Alipay app dominates digital payments in China, with more than 730 million monthly users. The Hangzhou-based company has also built an empire connecting Chinese borrowers and lenders, securing short-term loans within minutes.
China last month released draft rules to prevent monopoly behavior by internet companies, and the Politburo this month vowed to strengthen anti-monopoly efforts in 2021 and curb “disorderly capital expansion.” .
China also warned internet giants this month to prepare for closer scrutiny as it imposed fines and announced merger investigations involving Alibaba and Tencent Holdings Ltd.