China’s central bank has accused Ant Group, the Chinese fintech giant, of “turning a blind eye” to regulatory compliance issues and ordered it to “rectify” its operations, in the latest government broadside directed against Jack Ma’s online empire.
Ant responded to Sunday’s rebuke with a statement saying it had “immediately” started drawing up plans and timetables to meet the demands laid out by the People’s Bank of China. The group added that it would “greatly” improve compliance by conducting an overhaul of its business.
Last Thursday China’s State Administration for Market Regulation announced that it had launched an antitrust investigation into Mr Ma’s ecommerce platform Alibaba, the country’s biggest tech company, for possible monopolistic practices. On the same day, financial regulators led by the PBoC said in a brief statement they would “supervise and guide” Ant on issues related to fair competition and consumer protection.
PBoC and Ant representatives met on Saturday, and on Sunday the central bank issued a rare public rebuke on its website. It posted an interview transcript with Pan Gongsheng, deputy governor, who accused Ant of “having little legal knowledge and turning a blind eye to compliance requirements”.
Mr Pan went on to require Ant to take a series of measures, including an overhaul of its highly profitable consumer lending and asset securitisation businesses that have prompted concerns over credit risks.
The incident is the latest move by Beijing to bring the once powerful industry leader to heel. Last month regulators scuppered Ant’s planned $37bn initial public offering, which would have been the world’s largest.
The dramatic intervention to halt Ant’s IPO came just days after Mr Ma, China’s richest man, said during a high-profile speech in Shanghai that the country’s state-owned banks had a conservative “pawnshop” mentality that prevented credit from flowing to smaller companies and individuals.
Mr Ma’s comments were seen as particularly brazen as he was speaking at an event attended by senior regulatory officials and also addressed by vice-president Wang Qishan, who emphasised the need to guard against financial risks.
Since its IPO was halted, Ant has taken a number of measures to demonstrate its willingness to rein in many of its operations, especially in the fast-growing consumer finance sector.
Last week the group suspended its popular online deposit business that helped regional banks to draw funding from across the country — a possible breach of regulations prohibiting lenders from operating beyond their home provinces.
A few days later, the group said it would cut loan quotas for some young borrowers so they could develop “more rational” consumption habits. Jane Zhang, a Shanghai-based marketing assistant, said that her borrowing quota had fallen by 90 per cent to less than Rmb2,000 ($306).
“I could once count on Jiebei to buy a Gucci bag,” said Ms Zhang, referring to Ant’s online lending app. “Now it’s barely enough to afford a budget smartphone.”