Ant and China banks are reining in joint loans
Ant Group Co. and at least a dozen banks are paring back their years-long cooperation on consumer lending platforms that fuel the spending of at least 500 million people across China.
Regulators have signaled their intention to curb online loans in recent months, prompting banks and Ant itself to discuss lending caps, people familiar with the matter said, asking not to be identified discussing a private information.
Banks in Zhejiang province have been instructed to cut their exposure to Ant via joint loans on the firm’s Jiebei and Huabei platforms, the people said. Some lenders in Shanghai have set a timetable for a gradual reduction in joint offerings, while at least one in Shandong has completely suspended ties with the firm, the people said.
The moves have taken place in parallel with Ant’s discussions with Chinese authorities on a restructuring plan. reported on Wednesday that Ant has agreed to become a financial holding company, making it subject to capital requirements similar to those for banks.
Consumer credit has been crucial in driving growth at Ant’s digital finance business, which contributed 63% of the firm’s revenue in the first half of 2020 before the authorities unleashed a barrage of rules to curb the country’s booming financial technology industry. Regulators also want to prevent any one firm from becoming too dominant.
The regulators upended a $35 billion initial public offering by Ant Group in November, stunning investors from Shanghai to New York.
In a conference call with investors on Tuesday, Alibaba Group Holding Ltd. Chief Executive Officer Daniel Zhang said there is “substantial uncertainty” with Ant’s business and it is 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.