Jack Ma – the biggest rags to riches story of China has been put into his place by Beijing. The Chinese Central has asked Ant Group executive to “rectify” the company’s lending, insurance and wealth management services.
In an apparent nudge to break up the company the central bank stressed that Ant needed to “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.
Ant Group which grew out of Alipay – world’s largest payment service is one of largest Financial Services and Payment services provider with massive investments in technology sector. In October 2020, Ant Group was set to raise US$34.5 billion in the world’s largest IPO at the time, valuing the company at US$313 billion. The IPO was stopped at the very last moment by Chinese regulators.
The Ant Group operates Alipay largest payment system in China & is the largest online insurance provider. The groups lending and investments target individuals and small businesses. The group has about 4% market share in consumer and small-business loans. It was fast becoming a financial business that could be described as too big to fail.
The group is now expected to set up a separate financial holding company to ensure it has sufficient capital, and protect personal private data, The People’s Bank of China (PBC) said.
“Ant ignored regulatory requirements, engaged in regulatory arbitrage and squeezed peers by using its market-leading status”
PBC Deputy Governor Pan Gongsheng
PBC’s Deputy Governor Pan Gongsheng said, “Ant ignored regulatory requirements, engaged in regulatory arbitrage and squeezed peers by using its market-leading status”. The deputy governor also pointed out the flaws in Ant’s corporate management system, and that the company had hurt consumers’ legal interests, which had led to complaints being filed. Earlier this month This month, the Politburo, Chinese Communist Party’s top decision-making body, vowed to step up antitrust efforts and prevent “disorderly capital expansion” with an indirect swipe at the Ant Group.
“We appreciate financial regulators’ guidance and help. The rectification is an opportunity for Ant Group to strengthen the foundation for our business to grow with full compliance, and to continue focusing on innovating for social good and serving small businesses,” Ant Group said in a statement.
