China green-lit Jack Ma's Ant Group to run a consumer banking company, giving the nation more control after authorities yanked its $35 billion IPO
- Ant's new company is the first step of a forced restructuring after
Chinayanked its IPO.
- Chinese regulators had grown concerned over the tech company operating like a bank.
- The new consumer
financefirm will have state-owned shareholders and will issue personal loans.
It's the first step of Ant's forced restructuring after China yanked its $35 billion IPO in October 2020. It also means the company will be regulated more like a traditional financial entity, giving authorities more oversight overAnt's consumer finance firm will be called Chongqing Ant Consumer Finance. It will issue personal loans, financial bonds, accept deposits, and borrow from Chinese financial institutions, among other things. Ant's Huabei and Jiebei credit arms, which previously offered the loans that Ant issued, will also fall under this new company along with its online lending operations.
An Ant Group spokesperson told Insider: "Under the guidance of regulators, Ant will work with other shareholders of Chongqing Ant Consumer Finance Co., Ltd. to serve the needs of consumers, and to continue enhancing the quality of financial services and risk management capabilities."Ant's massive online lending business has been one of its most lucrative areas, but it landed the company in hot water over concerns that the financial technology giant was operating too much like a bank. Regulators were also concerned about Ant biting into the business of some Chinese banks and siphoning off millions of customers.
The situation escalated when Ma publicly criticized China's lending methods and financial system at a conference in late October 2020. Ant was poised to go public, but Chinese authorities stepped in and pulled the IPO. Reports later surfaced that Chinese President Xi Jinping personally instructed authorities to look into Ant following Ma's comments.Read more: China's antitrust probe into Alibaba could be an opportunity for other cloud players - including Amazon, Microsoft, and Google - to swoop in The company was then ordered to restructure its business and "return to its payment origins."
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