BEIJING: Chinese regulators imposed a series of requirements on Ant Group Co, including that the company returning to its origin of being a payments service provider and reforming lending, insurance and wealth management services, after summoning the fintech behemoth on Saturday.
Ant must be aware of the severity and necessity of restructuring its businesses, and come up with a plan and timetable as soon as possible, the People’s Bank of China said in a statement on Sunday.
The Hangzhou-based firm also needs to set up a financial holding company to ensure capital sufficiency and compliance in connected transactions, while protecting personal data privacy in its credit-scoring services, it said.
The authorities also blasted Ant for what they said was poor corporate governance, disdain toward regulators’ compliance requirements, and engaging in regulatory arbitrage. The PBOC said Ant used its dominance to exclude rivals, hurting consumers’ interests.
China kicked off an investigation Thursday into alleged monopolistic practices at Alibaba Group Holding Ltd and summoned affiliate Ant to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet domain. 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’s chairman, “Pony” Ma Huateng, and other tycoons are now under scrutiny after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Ma’s own empire is in crisis mode. As of early December, with Ant under regulatory scrutiny, the man most closely identified with the meteoric rise of China Inc was advised by the government to stay in the country, a person familiar with the matter has said.
Alibaba itself has shed more than US$100 billion of market value since November, when regulators torpedoed what would have been a record US$35 billion Ant debut.
His top executives are part of a task force that already has almost daily interactions with watchdogs.
Meanwhile, regulators, including the China Banking and Insurance Regulatory Commission, are weighing which businesses Ant should give up control of to contain the risks it poses to the economy, officials with knowledge of the matter have said.
They haven’t settled on whether to carve up its different lines of operation, split its online and offline services, or pursue a different path altogether.