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(Dec 27): Chinese regulators imposed a series of requirements on Ant Group Co, including that the company return to its origin as a payment service provider and reform loan, insurance and wealth management services, after convening the fintech giant on Saturday.
Ant should be aware of the seriousness and need to restructure its businesses and come up with a plan and schedule as soon as possible, the People’s Bank of China said in a statement Sunday. The Hangzhou-based firm also needs to establish a financial holding company to ensure capital adequacy and compliance in connected transactions, while protecting the privacy of personal data in its credit rating services, it said.
Authorities also criticized Ant for what they said was poor corporate governance, disdain for regulatory compliance requirements and participation in regulatory arbitration. The People’s Bank of China said Ant used his dominance to shut out rivals, hurting consumers’ interests.
China on Thursday launched an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd and convened affiliate Ant for a high-level meeting on financial regulations, intensifying scrutiny on the twin pillars of billionaire Jack Ma’s internet dominance. The pressure on Ma is central to a broader effort to curb an increasingly influential Internet sphere.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, the empires built by Ma, Tencent Holdings Ltd chairman “Pony” Ma Huateng, and other tycoons are now under scrutiny after accumulating hundreds of millions. users and gain influence over almost every aspect of daily life in China.
Ma’s own empire is in crisis mode. In early December, with Ant under regulatory scrutiny, the government advised the man most closely identified with the meteoric rise of China Inc. to stay in the country, a person familiar with the matter said. Alibaba itself has lost more than $ 100 billion in market value since November, when regulators torpedoed what would have been a record $ 35 billion debut from Ant.
Its top executives are part of a work group that already has almost daily interactions with watchdogs. Meanwhile, regulators, including the China Banking and Insurance Regulatory Commission, are weighing which companies Ant should cede control to to contain the risks it poses to the economy, officials with knowledge of the matter said. They haven’t decided whether to split their different lines of operation, split their online and offline services, or go a completely different path.
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