Surrender to Chinese Authorities? Ant Group "Considering Bank-Like Regulated Holding Company Structure"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Ant Group, the fintech affiliate of China's Alibaba Group, is reportedly considering transitioning its financial business into a holding company structure subject to bank-level regulations.

On the 29th, Bloomberg News cited multiple sources saying, "There are plans to transfer businesses requiring financial licenses to a holding company," adding, "This is still under discussion and subject to change."

This comes after Alibaba founder Jack Ma strongly criticized Chinese financial authorities on October 24 at an event attended by high-ranking officials including Vice President Wang Qishan and People's Bank of China Governor Yi Gang, stating that "Chinese financial authorities are still stuck in pawnshop-style lending that requires collateral." Following this, Ant Group's initial public offering (IPO) was canceled amid ongoing regulatory pressure from Chinese authorities.

In particular, on the 26th of this month, the People's Bank of China and three other major financial regulatory agencies summoned Ant Group's management for a "pre-arranged meeting," criticizing them for a "lack of legal compliance awareness" and delivering "five major improvement demands." Pre-arranged meetings are mainly a system where higher authorities point out operational issues of subordinate institutions and demand corrections, but in reality, they are often seen as a form of strict disciplinary action.

Ant Group has undergone two such pre-arranged meetings so far this year.

The demands include ▲ rectifying illegal lending and the sale of insurance and investment products ▲ establishing a financial holding company and maintaining sufficient capital, among others.

This content was produced with the assistance of AI translation services.