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14 Apr Chinese Financial Authorities Hold Regulatory Talks with Ant Group Again
China’s major financial authorities, including PBoC, CBIRC, CSRC, and SAFE, summoned Ant Group for another regulatory talk with Ant Group on April 12, as reported by Caixin on the next day. According to Pan Gongsheng, PBoC’s deputy governor, the talk, echoing the country’s recent efforts to mitigate financial risk and establish a healthy financial market, was intended to point out Ant Group’s existing problems in its financial business and to reiterate the necessity for overhaul for the company. In response, Ant Group said it would closely follow the instructions of the regulators and actively push forward its current rectification plan, continuing to improve its service for the real economy, small- and micro-sized enterprises, and consumers.
The regulators required Ant Group to make improvements in five areas, including offering consumers more payment options, stopping information monopoly, accelerating the conversion into a financial holding company, accepting prudential regulation and supervision as well as managing the liquidity risk of its key fund products. Specifically, the authorities ordered the company to cut the connections between its payment app AliPay, its consumer lending arm Huabei and its virtual credit card service Jiebei. According to the current plan, Ant Group itself would transform into a financial holding firm, with its fintech businesses kept under financial supervision. The Huabei and Jiebei units, which in combination posted RMB1.7tr of outstanding loans as of June 2020, would be managed by Ant Group’s consumer finance company in the future, while Ant Group would also set up a separate personal credit reporting company and apply for a separate license, in order to strengthen its data protection process. The company was also asked to significantly reduce the outstanding value of its money-market fund Yu’e Bao, which had RMB1.19tr of assets as of the end of 2020.
The latest regulatory talk came after two interviews in November and December 2020, which forced Ant Group to temporarily give up its USD37bn dual listing in Shanghai and Hong Kong. In the past few months, the Chinese government has been tightening its grip on internet loan businesses. On November 2, 2020, CBIRC and PBoC issued draft rules for online microlending services in the country, setting the single-platform lending cap at RMB300,000 for an individual and RMB1m for enterprises. This February, CBIRC also revised the rules for internet loans, which required online lending platforms to contribute to at least 30% of the total funding for loans they offer in collaboration with commercial banks, starting from January 1, 2022.