China plots ‘rectification’ drive to bring Jack Ma’s Ant Group to heel
Beijing to carve out fintech’s most lucrative units into tightly regulated holding company
Beijing is accelerating plans to bring Jack Ma’s Ant Group more closely under its control as part of a “rectification” drive that would make it difficult for one of China’s richest men to fully rebuild his online empire.
Ant’s consumer lending unit and other fast-growing parts of the financial technology group will be carved out into a new financial holding company to be regulated by the People’s Bank of China, according to people briefed on discussions between the central bank and the company.
The reorganisation would bring Ant directly under the thumb of the regulators Mr Ma has long brushed up against, with public critiques that irked authorities and officials at China’s state-owned banks. The PBoC issued a public rebuke of Ant at the weekend, calling on the company to be overhauled and accusing it of “turning a blind eye to compliance requirements”.
One former regulator said: “The best solution is to break up Ant into a finance unit for its online lending, brokerage and insurance businesses that will be under full regulatory oversight, and a less regulated technology and data unit.”
Mr Ma has long needled officials with his ambitions to reshape the country’s state-led financial system.
“If the banks won’t change, we will change the banks,” he said about a decade ago. “We want to shake up state-owned enterprises.”
More recently, he accused China’s banks of harbouring a “pawnshop mentality” in public remarks delivered shortly before Ant’s $37bn initial public offering was cancelled by regulators in November.
Ant has reshaped its business in response to regulatory directives several times in recent years. But Pan Gongsheng, PBoC deputy governor, made it clear in an interview transcript published on Sunday that bigger changes were coming. Ant “must integrate its development into the overall plan of the country’s development” he said.
China’s state-owned lenders have long complained that their online competitors have reaped an unfair advantage by being subject to less stringent regulations.
The plan under consideration for Ant involves shifting its financially-licensed businesses — which include its payments, lending, insurance and wealth management ventures — into a new holding company, the people familiar with the matter said. However, they cautioned that the discussions with regulators were continuing.