Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
Chinese regulators have imposed a series of requirements on Ant Group Co., including that the company returned to its origins as a payment service provider and reformed its loan, insurance and wealth management services, after summoning the fintech giant on Saturday.
Ant must be aware of the seriousness and need to restructure its business and present a plan and schedule as soon as possible, the People’s Bank of China said in a statement on Sunday. The Hangzhou-based company also needs to create a financial holding company to ensure capital sufficiency and compliance in connected transactions, while protecting the privacy of personal data in its credit scoring services, he said.
The authorities also criticized Ant for what they considered corporate governance to be poor, disdain for regulators’ compliance requirements and involvement in regulatory arbitration. The PBOC said Ant used its domain to exclude rivals, harming consumer interests.
China opened an investigation on Thursday about alleged monopoly practices at Alibaba Group Holding Ltd. and called affiliate Ant to a high-level meeting on financial regulations, increasing scrutiny over the two pillars of the billionaire’s Internet domain Jack Ma. The pressure on Ma is central to a broader effort to contain an increasingly influential Internet sphere.
Formerly hailed as engines of economic prosperity and symbols of the country’s technological prowess, the empires built by Ma, Tencent Holdings Ltd. president “Pony” Ma Huateng and other tycoons are now under scrutiny after accumulating hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Ma’s empire is in crisis. In early December, with Ant under regulatory scrutiny, the man most identified with the meteoric rise of China Inc. was advised by the government to stay in the country, a person familiar with the matter said. Alibaba himself has lost more than $ 100 billion in market value since November, when regulators torpedoed what would be a record $ 35 billion debut in Ant.
Its 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 companies Ant should relinquish control of to contain the risks it poses to the economy, officials with knowledge of the matter said. They have not yet decided whether to divide their different lines of operation, divide their services online and offline, or take a completely different path.
Read More: Jack Ma is silent after the spectacular defeat of the Ant Group
– With the help of John Liu, Jessica Sui and Jun Luo
(Updates with more details of the second paragraph.)