Ant Group has set up a working group to rectify the situation.
Chen Yulu, deputy governor of the Communist Party of China’s central bank, said Ant Group has set up a working group to rectify the situation. The question of how the trillions of joint loans will be regulated and whether user data will be returned to the central bank is still up in the air, while the whereabouts of Ant Group’s de facto controller Jack Ma is a mystery.
On Dec. 26 last year, China’s central bank, the CBRC, the SFC, the Foreign Exchange Bureau and other financial management authorities jointly interviewed Ant Group, saying that there were major problems in its operation. Five rectification requirements were put forward to Ant Group: first, return to the origin of payments, improve the transparency of transactions and strictly prohibit unfair competition; second, license and operate personal credit business legally and compliantly in accordance with the law and protect the privacy of personal data; third, establish a financial holding company in accordance with the law, strictly implement regulatory requirements and ensure adequate capital and compliance with related transactions; fourth, improve corporate governance and strictly rectify irregular credit, Insurance, wealth management and other financial activities in accordance with prudential supervision requirements; v. Compliance with the law to carry out securities and fund business, strengthen the governance of securities-type institutions, and compliance with asset securitization business.
Comprehensive Chinese mainland media reported on Jan. 19 that Chen Yulu, vice governor of China’s central bank, said at a press conference at the State Information Office that the Ant Group has set up a working group for rectification under the guidance of the financial management and is working on a rectification schedule, while maintaining business continuity and normal business operations to ensure the quality of financial services to the public.
Ant Group already has traditional financial licenses such as banking, insurance, funds and securities, and has also obtained Internet financial licenses such as consumer finance, third-party payment and network microfinance licenses. Ant Group is currently working on a plan to set up a financial holding company to load Ant Group’s financial business into the newly established financial holding company. Once the above business is incorporated under the financial holding company, Ant Group will be subject to strict financial regulation and constraints.
Market speculation is that Ant Group may integrate its personal credit, fund sales, insurance, payments and other finance-related businesses into the financial holding company and accept the supervision of the financial holding company. Another category of more technology-related businesses such as cloud computing, big data and intelligent risk control would form another technology company.
However, based on the types of financial institutions identified by China’s central bank, it seems that it is still controversial whether all of Ant Group’s financial businesses go into the financial holding company.
Because in terms of license types, Zhejiang Netcom Bank, insurance, and Tianhong Fund belong to traditional financial licenses and will definitely be loaded into the financial holding company. And from the viewpoint of asset size, Tianhong fund trustee scale 1.4 trillion, net business bank total assets 224 billion yuan, but also enough to reach the threshold of China’s central bank regulations. However, as Alipay, Hanbang and Borrowing are not among the five types of financial institutions officially listed, the definition of “other institutions identified by the financial authorities” has become a major factor affecting how the trillions of joint loans are regulated.
Another suspense is the ownership of user credit and other data, which is an extremely important asset for Internet companies.
In 2015, Ant Group officially launched its credit business (Sesame Credit). As an independent third-party credit agency, Sesame Credit integrates behavioral data from more than 300 million real-name individuals and 37 million businesses, and scores individual users and small businesses based on their use of Ant-related services, and uses this as the basis for conducting business through AntPay and Debit, as well as for referring customers to partner institutions.
In the case of Ant Group’s joint lending, for example, Ant Group usually takes the lead in cooperation with banks and other financial institutions because it has the advantage of having a large amount of data. It is reported that Ant Group usually charges up to about 30% for technical services, while small banks are usually in a weak position and rely heavily on Ant Group’s data to approve loans and manage risks.
Sources said China’s central bank plans to direct that the Internet giant’s loan data be entered into its unified national credit agency.
Ma, the de facto controller of Ant Group, has disappeared from public view for more than two months since Ant Group executives were interviewed jointly, and his whereabouts remain a mystery.
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