Regulators summon Ant
▶ Compliance good for long- term development
Talks with regulators will make Ant Group healthier and live longer, Chinese analysts said on Thursday, after financial regulators announced that they are summoning Ant for a second round of talks, less than two months after the first discussions caused the company to suspend its historic dual IPO.
Talks with regulators will make Ant Group healthier and live longer, Chinese analysts said on Thursday, after financial regulators announced that they are summoning Ant for a second round of talks, less than two months after the first discussions caused the company to suspend its historic dual IPO.
Effective regulation by watchdogs will be a favorable condition for the growth of Ant, an offshoot of e- commerce giant Alibaba, though in the short term there will be a considerable impact, analysts pointed out.
The country’s central bank, the banking and insurance regulator, the securities regulator and the foreign exchange regulator will conduct regulatory talks with Ant Group within the next few days, according to a separate statement on the central bank’s website on Thursday.
The talks are expected to urge Ant to implement financial regulatory requirements, practice fair competition and protect consumers’ legitimate rights, in accordance with marketoriented and law- based principles, thereby regulating the operation and development of financial businesses, the statement said.
Top market regulators in November released proposals for tighter regulations for the country’s rapidly growing online personal loan sector, seeking to cap loans extended to a single individual at exceed 300,000 yuan ($ 44,850) and loans to an entity at 1 million yuan.
Fintech companies, including Ant Group, Baidu, Tencent and JD Digit, have moved to remove online deposit services from their platforms over the past week in line with new regulatory requirements for the internet deposit industry.
Analysts said with the regulators inclined to apply a universal set of rules to banks and internet finance companies, Ant’s business scope will change significantly, but it will develop in a healthier way.
The traditional financing regulatory structure functions like The Titanic; it puts different business, such as deposits, insurance and wealth management in different waterproof chambers to prevent systemic risks.
Fintech platforms like Ant, however, operate like a conglomerate and offer a vast array of services to benefit from its vast user base, built up by its e- payment function. So there is a possibility that risks will spread from one business to another.
“The carefree adolescent years are over, and big companies are expected to act like grown- ups, and, due to their immense sizes and dominant market positions, the regulators actually expect them to be the most responsible grown- ups in the class,” Li Junhui, a professor at the China University of Political Science and Law who follows e- commerce and the internet, told the Global Times on Thursday.
Based on the company’s implementation of relevant regulations, Ant could face divestment or readjustment of its operations, and the ensuing IPO and its valuations will be affected accordingly, Li said.
Amid the ruthless onslaught of the economy by the COVID- 19 pandemic, there have been rising critical calls from the battered banking industries that Ant’s business enjoys favorable conditions as it does not need to follow stringent compliance rules like banks. The news of the second talks prompted some to fear for Ant’s suspended IPO.