Jack Ma’s Ant Group has secured approval from banking regulators in the central Chinese mega-city of Chongqing for its consumer finance subsidiary to commence business operations, amidst a push from authorities for Ant Group to set aside its Huabei and Jiebei consumer credit platforms.
On 3 June the Chongqing office of the China Banking and Insurance Regulatory Commission (CBIRC) announced that it had given its approval for Chongqing Ant Consumer Finance Co., Ltd. (重庆蚂蚁消费金融有限) to start operation, with registered capital of 8 billion yuan (approx. USD$1.25 billion).
The move comes after Chinese regulators required that Ant Group convert into a financial holding company, as well as separate its Huabei and Jiebei consumer credit vehicles in order to reduce risk concerns.
CBIRC said to domestic media that in accordance with its rectification plan Ant Group is required to make its Huabei and Jiebei consumer credit platforms exclusive consumer lending products of Ant Consumer Finance within a six month period.
Other financial institutions that make use of data provided by Ant Group to issue consumer loans are no longer permitted to use the “Huabei” or Jiebei” titles.
CBIRC has also required that Ant Group adopt effective measures to ensure that consumers are fully apprised of the names of service providers when applying for consumer loans, in order to avoid confusion over brand identities.
“Upon commencing operation Ant Consumer Finance will take over the consumer loan business of Ant Group’s micro-loan company, which will be of benefit to Ant Group implementing requirements for rectification of its consumer loan operations, and comprehensively including relevant operations within regulatory scrutiny,” said a senior official from CBIRC’s non-banking department.
“This is a key measure for thorough implementing the key policies of the central government on strengthening financial regulation and preventing financial risk.
“After obtaining approval to commence operation, Ant Consumer Finance must lawfully accept regulation, and continue the consumer loan operations of the two micro-loan vehicles in accordance with regulatory provisions.
“Within a one year transition period after Ant Consumer Finance commences operation, the two micro-loan companies will complete stable and orderly withdrawal from the market.”
CBIRC said that Ant Group must also appropriately dispose of the asset-backed securities (ABS) of Huabei and Jiebei within the one year transition period.
Ant Group is Ant Consumer Finance’s largest shareholder with a 50% equity stake. Nanyang Commercial Bank made a capital contribution of 1.2008 billion yuan to hold 15.01% of equity, making it the second largest shareholder, while Cathay United Bank has 10% stake.
Other key shareholders include Contemporary Amperex Technology (宁德时代新能源科技股份有限公司) with an 8% equity stake, SureKAM Corporation (北京千方科技股份有限公司) with a 7.01% stake, China Huarong Asset Management (中国华融资产管理股份有限公司) with a 4.99% stake, and Jiangsu Yuyue Medical Equipment (江苏鱼跃医疗设备股份有限公司), also with a 4.99% stake.
The past year has been a highly fraught period for Ant Group, which has come under increasing pressure from risk-preoccupied Chinese regulators.
Chinese authorities scuppered Ant Group’s proposed listing on the Hong Kong and Shanghai stock exchanges at the start of November 2020, before levelling strong criticism at its business practices and demanding that it convert into a financial holding company in order to facilitate regulatory scrutiny.
