Chinese fintech giant Ant Group has been
ordered by regulators to drastically change its business model and return to
its roots as a payment services provider, as the state squeeze continues on
the once unbridled empire of tech tycoon Jack Ma.
China’s central bank summoned Ant executives over the weekend and demanded
the company “strictly rectify” its lending, insurance and wealth management
services, according to a statement released on Sunday.
The edict comes just weeks after Ant Group’s record-breaking IPO was halted
at the last minute by Beijing, which has been ruthless in its takedown of a
company once vaunted as the poster child for Chinese technology.
Last Thursday regulators also launched an anti-monopoly investigation into
Alibaba — of which Ant Group is a subsidiary — sending the share price of
the e-commerce giant tumbling and intensifying the troubles of its billionaire
Alibaba’s dropped nearly nine percent in Monday trading in Hong Kong, as
investors grow increasingly nervous over a company in the teeth of Beijing’s
Ant Group made its name via its main product Alipay, the online payments
platform and super-app that is now deeply embedded in China’s economy.
But the company also expanded into offering loans, credit, investments and
insurance to hundreds of millions of consumers and small businesses, spurring
fear and jealousy in a wider banking system geared more for supporting state
policy and large corporations.
Xinhua news agency reported Ant Group is now “strictly prohibited from
unfair competition” and is urged to redress its “illegal” financial activities.
The online payment titan’s problems include alleged flaws in corporate
governance, poor legal awareness and a lack of regulatory compliance, while it
stands accused of “leveraging market dominance to exclude competitors”.
Its reach into the daily spend of Chinese has also caused anxiety over the
potential for personal debt to turn sour and poison the wider economy.
As global demand for the dual Hong Kong-Shanghai listing pushed the IPO
toward record valuations — potentially handing Ma and Ant Group even more
funding, legitimacy and clout — Chinese regulators acted.
The outspoken and charismatic Ma — a former teacher — had previously
lashed out at China’s outdated financial system, calling state-owned banks
“pawn shops” in an October speech that led to him being summoned for
regulatory talks shortly before Ant’s IPO was suspended.
He has edged away from the limelight since the IPO collapsed.(AFP)