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China pushes Ant Group overhaul in latest crackdown on Ma

Published 12/27/2020, 01:36 AM
Updated 12/27/2020, 11:20 PM
© Reuters. FILE PHOTO: A thermal imaging camera is seen in front of a logo of Ant Group at the headquarters of Ant Group, an affiliate of Alibaba, in Hangzhou

© Reuters. FILE PHOTO: A thermal imaging camera is seen in front of a logo of Ant Group at the headquarters of Ant Group, an affiliate of Alibaba, in Hangzhou

BEIJING (Reuters) - China's central bank disclosed on Sunday it had asked the country's payments giant Ant Group Co Ltd to shake up its lending and other consumer finance operations, the latest blow to its billionaire founder and controlling shareholder Jack Ma.

The announcement came more than a month after Chinese regulators abruptly suspended Ant's blockbuster $37 billion initial public offering in Shanghai and Hong Kong, and only days after the country's antitrust authorities said they had launched a probe into Ma's e-commerce conglomerate Alibaba (NYSE:BABA) Group Holding Ltd.

Chinese regulators and Communist Party officials have set about reining in Ma's sprawling financial empire after he publicly criticized the country's regulatory system in October for stifling innovation.

Regulators have urged Ant to rectify financial regulatory violations, including in its credit, insurance and wealth management businesses, and overhaul its credit rating business to protect personal information, People's Bank of China (PBOC) Vice Governor Pan Gongsheng said on Sunday.

Pan's comments stopped short of calling for a breakup of Ant, yet pointed to a significant operational restructuring. Ant should set up a separate holding company to ensure capital adequacy and regulatory compliance, Pan said.

Ant should also be fully licensed to operate its personal credit business, and be more transparent about its third-party payment transactions and not engage in unfair competition, Pan added.

Ant said in a statement it would establish a "rectification" working group and fully implement regulatory requirements.

Ma was advised by the Chinese government to stay in the country, Bloomberg News has reported, citing a person familiar with the matter. Ma could not be reached for comment.

Pan said Ant representatives met on Saturday with officials from the PBOC and other Chinese banking, securities and foreign exchange regulators.

During the meeting, regulators pointed out Ant's issues including its poor corporate governance, defiance of regulatory demands, illegal regulatory arbitrage, the use of its market advantage to squeeze out competitors, and harming consumers' legal interests, according to Pan.

Ant traces its beginnings to Alipay, which was 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 also built an empire connecting China's borrowers and lenders, securing short-term loans within minutes. It was poised to be valued at more than $300 billion in its stock market debut.

Last month, China issued draft rules aimed at preventing monopolistic behaviour by internet firms, and the Politburo this month vowed to strengthen anti-monopoly efforts in 2021 and rein in "disorderly capital expansion."

China also warned internet giants this month to brace for increased scrutiny, as it slapped fines and announced probes into mergers involving Alibaba and Tencent Holdings (OTC:TCEHY) Ltd.

© Reuters. FILE PHOTO: A thermal imaging camera is seen in front of a logo of Ant Group at the headquarters of Ant Group, an affiliate of Alibaba, in Hangzhou

(Corrects that Alipay, not Ant, was launched in 2004 in paragraph 11)

Latest comments

Maybe we should be as worried about China taking over. They seem to be good at self sabotage.
CCP actually is smart in BABA vs people.
I was told by my Chinese Friend that many Chinese see Ants group as a Ponzi scheme , and the IPO as a ripoff for the stock market , in order to fatten pockets of insiders.
because the worst things is uncertainties for markets, tend to lower valuations beyond real consequences
good thing is, it's looks like it's going kind of fast. hope it will be resolved ASAP one way or the other
Jack leave China and invest somewhere in big market like India where democratic values upholds..
Unfortunately,India has already banned Alibaba's investment.
Baba will bounce back after correction. The plan is for BABA to develop a plan for its practice in order come to a solution asap!
Baba will end at $200 range tomorrow and continue to drop.
This is a retaliation for Ma calling out the ccp banking system.
Either they didn't pay the proper bribes / payoffs to the right members of the Chinese Communist Party, or the CCP is making a public show to demonstrate they are tough on these evil 'capitalists'.
Its about avoiding statemic risk. If only US regulators had acted before AIG and other financials became too big to fail, the GFC wouldnt have occured.
alibaba monday selloff continues.
Really? This news is a good one... they are pointing out their flaws and ANT is being compliant on all fronts.. did not mention any huge penalties or fines or whatsoever.. they seem to be on the same page
haha u mean jack dare to say no emperor xi? and tapering their exposure is cutting off their wells. u can buy and keep its your decision.
That's what I thought. They're willing to cooperate.
clamp down
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