China’s central bank disclosed 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, Trend reports citing Reuters.
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 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.
Ant was launched in 2004 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 Ltd.