Chinese regulators on Sunday restricted Jack Ma’s Ant Group’s operations on business of consumer loans and wealth management while also ordering the group to return to its original roots as a provider of payments services.
People’s Bank of China summoned Ant Group executives and told them ‘rectify’ their lending, insurance and wealth management services. The central bank in a statement on Sunday also stressed on the necessity of fixing the Ant Group as it needs to “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.
The series of intervention from the central bank has proved to be a serious threat to Alibaba co-founder Jack Ma’s online finance empire. Once China’s richest man, Ma’s wealth has grown rapidly from a PayPal-like operation into a full suite of services over the past 17 years.
Ant was poised for a public listing that would have valued it at more than $300 billion if it were not for the Chinese regulators to intervene. However, 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,” said Zhang Xiaoxi, a Beijing-based analyst at Gavekal Dragonomics. “We haven’t seen a clear indication of break-up yet. Ant is a giant player in the world and any breakup needs be to be cautious.”
Chinese authorities have been going after Ant Group relentlessly over the past few weeks. With the intensive crackdown on Jack Ma’s twin pillars, it also investigated the alleged malpractices of the Alibaba Group Holding Ltd over monopolistic behaviour.
