DBS Group Holdings Ltd’s top executive welcomes the increased regulatory scrutiny of financial technology companies in China and elsewhere in Asia, saying it would create fairer competition with banks that have been subject to stricter oversight.
“Over time you will start getting a more level playing field, and you’ll start getting a proportionate and even regulatory response to all participants in the market,” CEO Piyush Gupta said in an interview with Bloomberg Television yesterday.
Gupta spoke after being asked for his view on the shelving of Ant Group Co’s (螞蟻集團) initial public offering (IPO) in China as regulators seek to level competition between fintech giants and traditional banks.
Ant and other firms in the past few years have grown their financial services in China and beyond, including in Southeast Asia, where DBS is the largest lender.
“Our view has been in the past that many technology companies have been able to benefit from the arbitrage of not having the same regulatory regime and supervision overhead that banks do,” Gupta said. “And so as we get to that stage that’s actually helpful to us.”
China’s top banking watchdog, the China Banking and Insurance Regulatory Commission, is doubling down on a push to rein in financial technology companies such as Ant, promising to eliminate monopolistic practices and enhance risk controls in the industry.
Ant and other firms such as Tencent Holdings Ltd (騰訊) have built dominant positions in payments and online consumer lending over the past decade, free from the oversight applied to traditional financial companies.
Chinese regulators this month outlined new rules to curb the rapid growth and leverage at the nation’s more than 200 micro-lenders, putting a surprise halt to Ant’s US$35 billion IPO.
Ant, along with Tencent-backed Sea Ltd, has applied for Singapore’s digital banking licenses, which could pit them against major rivals such as DBS.
Over the past decade, Gupta has spent billions of dollars upgrading DBS’ technology and digitalization in anticipation of growing competition.
“Where we are today in our core markets, we are reasonably confident that we have what it takes to compete,” Gupta said.
India’s central bank this week asked DBS’ India unit to take over a capital-starved lender in the South Asian nation, in a deal that would see DBS India Ltd pump 25 billion rupees (US$336.9 million) in fresh capital in Lakshmi Vilas Bank Ltd.
While declining to comment on the plans due to pending regulatory approval, Gupta said that the deal would not affect DBS’ dividend payment.
China, India and Indonesia are key regional markets the bank is expanding into, he said.
In China, DBS received approval to set up a brokerage venture where it can own 51 percent.
The bank is to partner with “a couple” of local firms, Gupta said without naming them.
The lender is also growing its presence in the Greater Bay area of southern China and Hong Kong, and would target consumer finance.
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