Jack Ma’s Ant Group to develop into monetary holding firm

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An Ant Group logo is pictured at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China, on October 29, 2020.

Aly Song | Reuters

China’s Ant Group, the fintech giant whose $ 37 billion IPO was derailed by high-risk regulators a few days before its November release, will be restructuring as a financial holding on Monday, the country’s central bank said.

The overhaul comes two days after e-commerce giant Alibaba, which Ant belongs to, was fined $ 2.75 billion in antitrust law when China tightened control of the “platform economy”.

As part of the settlement, Ant will be restructuring as a financial holding company, which, along with other restrictions announced on Monday, is expected to limit the company’s profitability and valuation.

“The Ant Group places great emphasis on the seriousness of the rectification,” the company said in a statement, adding that it plans to build a personal credit report business and fold its two flagship loan businesses into the consumer finance company.

People’s Bank of China said Ant would sever the “inappropriate” link between payment service AliPay, virtual credit card business Jiebei and consumer credit unit Huabei as part of a “comprehensive and feasible restructuring plan”.

The central bank also urged Ant to break its “information monopoly and strictly adhere to business regulation requirements for credit information.”

The company, which is part of the sprawling business empire founded by billionaire Jack Ma, agreed to improve corporate governance and “rectify illegal financial activities in credit, insurance and asset management,” the central bank said.

The central bank said it had also asked Ant to control its leverage and product risks, as well as the liquidity risk of its flagship fund products, and “actively reduce” the size of its massive Yu’eBao money market fund.

The measures “set an example” for the financial regulation of the platform economy, “said the state-supported business newspaper in a comment on Monday.

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