Chinese regulators ordered Jack Ma’s online financial titan Ant Group Co. to return to its roots as a provider of payments services, threatening to throttle growth in its most lucrative businesses of consumer loans and wealth management.
Ant executive told to ‘rectify’ the company’s lending, insurance and wealth management services, after Central Bank summoned them, the People’s Bank of China said in a statement Sunday.
Executive stopped short of directly asking for a breakup of the company, the central bank stressed that Ant needed to “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.
Chinese regulators ordered Jack Ma’s online financial titan Ant Group Co. to return to its roots as a provider of payments services, threatening to throttle growth in its most lucrative businesses of consumer loans and wealth management.
The series of edicts represent a serious threat to the expansion of Ma’s online finance empire, which has grown rapidly from a PayPal-like operation into a full suite of services over the past 17 years. Before regulators intervened, Ant was poised for a public listing that would have valued it at more than $300 billion, with existing backers including Carlyle Group Inc. and Silver Lake Management LLC. 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.
Authorities also blasted Ant for sub-par corporate governance, disdain toward regulatory requirements, and engaging in regulatory arbitrage. The central bank said Ant used its dominance to exclude rivals, hurting the interests of its hundreds of millions of consumers.
China last week intensified its scrutiny of the twin pillars of billionaire Ma’s internet domain when it also kicked off an investigation into alleged monopolistic practices at Ant affiliate Alibaba Group Holding Ltd. The e-commerce firm’s US-listed shares tumbled the most ever on news of the probe.
