Jack Ma's Ant Group likely to scale down fin biz as per regulatory requirements2 min read . Updated: 29 Dec 2020, 11:04 AM IST
- The company is planning to fold its financial operations into a holding company that could be regulated more like a bank
- The move might cripple the growth of the fintech giant's most profitable units.
After Chinese regulators threatened to throttle Jack Ma’s Ant Group businesses over alleged monopolistic practices, the company is planning to fold its financial operations into a holding company that could be regulated more like a bank, as per a Bloomberg News report. The move might cripple the growth of the fintech giant's most profitable units.
The fintech giant is planning to move any unit that would require a financial license into the holding company, pending regulatory approval, said sources close to Bloomberg revealed. The plans are still under discussion and subject to change, the people said. Ant declined to comment on the subject.
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This comes after the People's bank, the country's central bank, on Saturday, summoned Ant executives and asked them 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.
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.
Responding to that Ant Group said 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.
(With Input from agencies)