Beijing has ordered Ant Group to overhaul lucrative parts of its business after accusing the Chinese payments company of “turning a blind eye” to regulatory issues in the latest official broadside at Jack Ma’s online empire.
Ant said on Sunday that it had “immediately” started drawing up plans and timetables to meet the demands laid out earlier in the day by China’s central bank in its rare public admonishment.
The incident is the latest move by Chinese authorities targeting the interests of Mr Ma, the country’s wealthiest individual. Last Thursday, China’s State Administration for Market Regulation announced that it had launched an antitrust investigation into Mr Ma’s ecommerce platform Alibaba, China’s biggest tech company, for possible monopolistic practices. In November, regulators at the last minute scuppered Ant’s planned $37bn initial public offering, which would have been the world’s largest ever.
The Chinese fintech giant said on Sunday that it would “greatly” improve compliance by conducting an overhaul of its business.
The rebuke of Ant came after representatives from the company and the People’s Bank of China met on Saturday. In an interview transcript posted on Sunday, Pan Gongsheng, the PBoC’s deputy governor, accused Ant of “having little legal knowledge and turning a blind eye to compliance requirements”.
Mr Pan went on to demand Ant take a series of measures, including an overhaul of its highly profitable consumer lending and asset securitisation businesses that have prompted concerns over credit risks.
The dramatic intervention to halt Ant’s IPO and continuing scrutiny of Alibaba followed a high-profile speech made by Mr Ma in Shanghai in November, in which he accused China’s state-owned banks of having a conservative “pawnshop” mentality that prevented credit from flowing to smaller companies and individuals.
Mr Ma’s comments were seen as particularly brazen as he was speaking at an event attended by senior regulatory officials and also addressed by China’s vice-president Wang Qishan, who emphasised the need to guard against financial risks.
Since its IPO was halted, Ant has taken a number of measures to demonstrate its willingness to rein in many of its operations, especially in the fast-growing consumer finance sector.
Last week, the group suspended its popular online deposit business that helped regional banks draw funding from across the country — a possible breach of regulations prohibiting lenders from operating beyond their home provinces.
A few days later, the group said it would cut loan quotas for some young borrowers so they could develop “more rational” consumption habits. Jane Zhang, a Shanghai-based marketing assistant, said that her borrowing quota had fallen by 90 per cent to less than Rmb2,000 ($306).
“I could once count on Jiebei to buy a Gucci bag,” said Ms Zhang, referring to Ant’s online lending app. “Now it’s barely enough to afford a budget smartphone.”