Welcome To Poole
Related Articles
[ad_1]
BEIJING • Ant Group and at least a dozen banks are cutting back their long-standing cooperation on consumer lending platforms that fuel the spending of at least 500 million people in China.
Regulators have signaled their intention to restrict online lending in recent months, prompting banks and Ant herself to discuss loan limits, people familiar with the matter said, asking not to be identified.
Banks in Zhejiang province have been instructed to reduce their exposure to Ant through joint loans on the company’s Jiebei and Huabei platforms, the people said.
Some lenders in Shanghai have set a timetable for a gradual reduction in joint offers, while at least one in Shandong has suspended ties with the company altogether, the people added.
These measures took place in parallel with Ant’s discussions with the Chinese authorities on a restructuring plan. Bloomberg reported on Wednesday that Ant had agreed to become a financial holding company, subjecting it to capital requirements similar to banks.
Consumer credit has been crucial in boosting the growth of Ant’s digital finance business, which contributed 63% of the company’s revenue in the first half of last year before authorities triggered a barrage of rules to curb the rise of the country’s FinTech industry. Regulators also want to prevent a company from becoming too dominant.
Regulators reversed an initial public offering of $ 35 billion (S $ 46.7 billion) by Ant Group in November last year, blowing investors from Shanghai to New York.
In a conference call with investors on Tuesday, Alibaba Group Holding CEO Daniel Zhang said there was “substantial uncertainty” about Ant’s business and that it was difficult to assess the impact of the new regulations. Alibaba owns a third of Ant and both were founded by billionaire Jack Ma.
Ant declined to comment. China’s Banking and Insurance Regulatory Commission did not respond to a request for comment.
The proposal to impose additional capital requirements on microlenders and require fintech platforms to provide at least 30% of the financing of loans offered jointly with banks has been one of the toughest for Ant.
Prior to the proposal, only about 2% of the more than 1.7 trillion yuan (S $ 351.3 billion) in loans remained on Ant’s balance sheet, with the bulk of the funding coming from its more than 100 banking partners.
Capping joint loans with banks could alleviate Ant’s capital shortfall under the new rules. Ant needs to inject at least 70 billion yuan in new capital just for its credit lending business to comply with regulations, according to a November estimate by analyst Francis Chan of Bloomberg Intelligence in Hong Kong.
“As the restructuring would bring Ant one step closer to relaunching its initial public offering, all of its units face more restrictions on capital, leverage and product pricing, risking growth,” did he declare.
BLOOMBERG
