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Jack Ma:
Beijing continues to curtail the power of the Chinese billionaire
Photo: Aly Song / REUTERS
In a new blow to the corporate empire of Chinese billionaire
Jack Ma,
56, regulators have ordered a restructuring of his financial firm Ant Group.
The star of the fintech industry has to transform itself into a financial holding that, like a bank, is subject to regulatory authorities.
This means that it has to meet stricter requirements and have more liquidity available.
The plan was announced by the Central Bank's deputy chief Pan Gongsheng on Monday after a meeting of the supervisory bodies for China's banking and securities sector with the leadership of the Ant Group in Beijing.
Only at the weekend, China's competition watchdogs imposed a record fine of 18 billion yuan (2.3 billion euros) on Alibaba.
The world's largest online trading platform has used its dominant position to force dealers to offer their goods exclusively through Alibaba, the market regulator justified the move.
It is the Chinese antitrust authorities' highest penalty to date against an Internet company.
CEO
Daniel Zhang
(49)
said the penalty will have "no negative impact" on Alibaba's operations.
Alibaba's stock rose significantly on Monday.
The problems for Alibaba began in the fall when the charismatic founder Ma criticized the tax authorities for holding back innovation shortly before the planned double listing of the Ant Group.
After that, the authorities simply canceled the debut on the floor in Shanghai and Hong Kong for a short time.
It should have been the biggest IPO of all time.
The unconventional methods of the Ant Goup, which also includes the leading mobile payment service Alipay, had long been a thorn in the side of the authorities.
Ant Group is severely curtailed in its business
The company offers not only mobile payment with the cell phone, but also fast consumer credit, asset management and insurance.
As deputy central bank chief Pan Gongsheng reported according to the state television, the Ant Group must in future eliminate "unfair competition" in its services.
Furthermore, the liquidity risks of his financial fund Yu'e Bao must be "actively reduced".
Loans would have to be offered in accordance with government regulations for lending and data protection.
The company must accept the stricter supervision of the authorities and stop "illegal" activities in credit, insurance and asset management.
The vice central bank chief demanded that high financial burdens and risks in his financial services should be better controlled.
The actions of the regulators are part of a greater scrutiny of the growing financial platforms on the Internet, where hidden risks are feared.
Company value could drop significantly
Experts had estimated the value of the Ant Group before the planned IPO at 280 billion US dollars.
The new requirements should not only significantly reduce the company's value, but also force Ant to "completely restructure its business," quoted the Financial Times as saying Zhao Xijun, professor of finance at Renmin University of China.
The aim is to bring Ant back to its origins as a payment platform and to significantly restrict the consumer credit business, the newspaper also quotes an unnamed senior official of a state bank.
For example, Ant has to cut the links between its Huabei and Jiebei lending services and its Alipay mobile payment platform.
Back to the origin?
Via Huabei and Jiebei alone, Ant brokered about a tenth of all consumer loans in China last year, according to "FT", with the group's total outstanding loan volume as of June 30th at the equivalent of $ 336 billion.
Alipay is currently linking the two microloans in its Alipay app, while Alibaba is promoting Huabei in the checkout phase of its e-commerce app.
The Ant Group is so far the largest player in the Chinese fintech sector.
Its mobile payment service Alipay has a billion users and more than half of the market share, followed by Tencent with Wechat.
In China, mobile payment with the cell phone is already the rule, so that little cash is paid.
Tens of trillion yuan, the equivalent of several trillion euros, flow through both payment services every year.
