Chinese regulators yesterday ordered Jack Ma’s (馬雲) online financial titan Ant Group Co (螞蟻集團), to return to its roots as a provider of payments services, threatening to throttle growth in its most lucrative businesses of consumer loans and wealth management.
The central bank summoned Ant executives on Saturday and told them to “rectify” the company’s lending, insurance and wealth management services, the People’s Bank of China said in a statement yesterday.
While it stopped short of directly asking for a breakup of the company, the central bank said that Ant needed to “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.
Photo: AFP
The series of edicts represent a serious threat to the expansion of Ma’s online finance empire, which has grown rapidly from a PayPal-like operation into a full suite of services over the past 17 years.
Before regulators intervened, Ant was poised for a public listing that would have valued it at more than US$300 billion.
The Hangzhou-based firm now needs to move forward with setting up a separate financial holding company to ensure it has sufficient capital, and protect personal private data, the central bank said.
“This is the culmination of a string of regulations and sets the direction for Ant’s business going forward,” Beijing-based Gavekal Dragonomics (龍洲經訊) analyst Zhang Xiaoxi said. “We haven’t seen clear indication of break-up yet. Ant is a giant player in the world and any breakup needs be to be cautious.”
Authorities also blasted Ant for sub-par corporate governance, disdain toward regulatory requirements and engaging in regulatory arbitrage.
The central bank said Ant used its dominance to exclude rivals, hurting the interests of its hundreds of millions of consumers.
China last week intensified its scrutiny of the twin pillars of billionaire Ma’s Internet domain when it also launched an investigation into alleged monopolistic practices at Ant affiliate Alibaba Group Holding Ltd (阿里巴巴).
The e-commerce firm’s US-listed shares tumbled the most ever on news of the probe.
China’s 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.
The pressure on Ma is central to a broader effort to curb an increasingly influential Internet sphere.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, the empires built by Ma, Tencent Holdings Ltd’s (騰訊) chairman “Pony” Ma Huateng (馬化騰) and other tycoons are under scrutiny after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Ma’s empire is in crisis mode. As of early this month, with Ant under regulatory scrutiny, the man most closely identified with the meteoric rise of China Inc was advised by the government to stay in the country, a person familiar with the matter has said.
Alibaba has shed more than US$200 billion of market value since last month, when regulators torpedoed what would have been a record US$35 billion Ant debut.
His top executives are part of a task force that already has almost daily interactions with watchdogs.
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