A fine and everything starts again?
Since the abrupt suspension of its IPO in November 2020, Ant Group has been placed under the supervision of the PBOC. It has been accused of contributing to the insecurity of the Chinese economy by granting loans, without assuming the risks.
Under pressure from the central bank, the company was ordered to restructure. Its consumer credit businesses, Huabei and Jiebei were united under a single structure, Chongqing Ant Consumer Finance. Above all, it must be transformed into financial holding. It means to submit to PBOC funding rules and requirements its consumer lending, insurance product distribution and payment processing businesses.
To complete this reorganization, like any bank, Ant Group must obtain a license dedicated. The payment of the fine from its regulatory authority should allow it. It should also relaunch the company’s growth and allow it to look back to the stock markets.
Discussions are reportedly underway between the company and the PBOC. Other regulatory authorities should intervene by the end of the year. According to the sources of Reuters, the fine is not expected to be disclosed until the second quarter of next year. Blame it on paused appointments in various government bodies. This is for example the case of Yi Gang, managing director of the central bank, close to retirement, normally replaced in March 2023.
Ant Group could benefit from a relaxation of the authorities
Beijing’s crackdown on its Tech sector has been triggered by a critical speech by Jack Ma against Chinese regulations. Ant Group, one of its companies, a subsidiary of Alibaba, paid the price first. The fine that the fintech is about to incur could reach the highest of this particular period, Alibaba had to pay 2.5 billion dollars in 2021, Didi Global 1.2 billion this summer.
Economic difficulties, particularly linked to the zero-Covid policy, have led Beijing to soften up in front of its Tech sector, even if concrete demonstrations remain rare. Ant Group could however take advantage of this to relaunch, in a more restrictive framework than before November 2020.