Home >Companies >People >China pushes Ant Group to rectify businesses. Here's what fintech asked to do

Chinese regulators have asked Jack Ma’s online financial titan Ant Group to rectify its business module by complying with the country's regulatory requirement. It also asked the company to continue as a provider of payments services, the way it had started out, threatening to throttle growth in its consumer loans and wealth management businesses.

The directive comes amid increased scrutiny of anti-monopoly practices in the country's internet sector.

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On Saturday, the People's bank, the country's central bank, summoned Ant executives and ordered them to formulate a rectification plan and an implementation timetable of its business, including its credit, insurance and wealth management services.

Here's what the regulator said in its statement:

In a statement released by the central bank on Sunday, it said Ant Group lacked a sound governance mechanism, defied regulatory compliance requirements and engaged in regulatory arbitrage.

The company used its market position to exclude rivals and hurt the rights and interests of consumers.

Regulators ordered Ant Group to establish a financial holding company and hold sufficient capital.

They also said that Ant Group should return to its payments origins, enhance transparency around transactions and prohibit unfair competition.

The company should improve corporate governance and ensuring that it complies with regulatory requirements for its businesses.

Ant Group said in a statement on Sunday that it would comply with regulatory requirements and enhance risk management and control, and that a working group would be set up to make the necessary rectifications.

“We appreciate financial regulators' guidance and help," the statement said.

"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," it added.

Ant Group, which started out as a payments services for Alibaba's e-commerce platform Taobao, has since expanded to offer insurance and investment products to its hundreds of millions of users in mainland China. The orders from regulators could limit Ant Group's expansion and throw its lucrative finance businesses into disarray.

Alibaba hikes share buyback plan

Alibaba Group Holding Ltd. raised a proposed stock repurchase program by $4 billion to $10 billion, offering more support for its battered shares.

China’s e-commerce leader said Monday its board has authorized the increased program, effective for two years through the end of 2022. It had started buying back shares this quarter.

Alibaba’s stock is down roughly 30% from its 2020 peak, battered by deepening scrutiny of the giant Chinese internet sector and alleged monopolistic practices at the crown jewel of billionaire Jack Ma’s internet empire.

In November, China released draft regulations to clamp down on anti-competitive practices in the industry, such as signing exclusive agreements with merchants and the use of subsidies to squeeze out competitors.

China last week intensified its scrutiny of the twin pillars of billionaire Ma’s internet domain when it also kicked off an investigation into alleged monopolistic practices at Ant affiliate Alibaba Group Holding Ltd. The e-commerce firm’s U.S.-listed shares tumbled the most ever on news of the probe.

The State Administration for Market Regulation dispatched investigators to Alibaba on Thursday and the on-site investigation was completed on the day, according to a Saturday report posted on a news app run by the Zhejiang Daily. The report cited an unnamed official from the local market regulation watchdog in Zhejiang province, where Alibaba is based.

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