[ad_1]
New Delhi: Chinese authorities announced on Friday a 7.12 billion yuan ($984 million) fine for Ant Group, ending a years-long regulatory overhaul of the fintech company and marking a key step to concluding a crackdown on the country’s internet sector.
China’s central bank, which has been driving the revamp at Ant after the company’s $37 billion IPO was scuttled in late 2020, said it would fine Ant 7.1 billion yuan, require it to stop operations of its crowdfunded medical aid service Xianghubao and compensate users.
The penalty amounts to one of the largest ever fines for an internet company in China.Ant and its subsidiaries had violated laws concerning corporate governance and financial consumer protection, and participated in business activities that were supposed to be conducted by bank and insurance institutions, the People’s Bank of China (PBOC) said.
cre Trending Stories
Next, the financial regulators “will focus on improving ‘normalized’ supervision levels of platform companies’ financial businesses, and bring all kinds of financial activities under supervision,” the PBOC said. Ant said it had completed its rectification work. “We will comply with the terms of the penalty in all earnestness and sincerity and continue to further enhance our compliance governance.” It closed Xianghubao in 2021.
Reuters reported earlier, citing sources, that Chinese authorities intended to unveil its fine on Ant as early as Friday. Besides Ant, the Chinese authorities also announced they had fined Ping An Bank (000001.SZ), insurer PICC Property and Casualty (2328.HK), Postal Savings Bank (1658.HK) and Tencent Holdings (0700.HK) Tenpay, with Tenpay given a penalty of 2.4 billion yuan for committing violations in areas such as customer data management.
ALIBABA SHARES JUMP
U.S.-listed shares in Ant’s affiliate, e-commerce titan Alibaba Group (9988.HK), rose 6% after the PBOC’s announcement. Earlier in the day, its Hong Kong shares jumped as much as 6.4% after the Reuters report before giving up some gains.
Ant’s penalty paves the way for the fintech firm to secure a financial holding company license, seek growth, and eventually, revive its plans for a stock market debut.
For the broader technology sector, the fine marks a key step towards the conclusion of China’s bruising crackdown on private enterprises, that began with the scrapping of Ant’s IPO and which has subsequently wiped billions off the market value of several companies.
Moves by the Chinese government to “finalise penalties, clarify its expectations, and draw clear compliance boundaries are key to stabilising private sector confidence,” said Rukim Kuang, founder of Beijing-based Lens Consulting.
Jeffrey Towson, a partner of TechMoat consulting, said that Ant had a “fantastic” growth path going forward now that its regulatory issues, which mainly impacted its domestic payment and credit businesses, were resolved.
“Alipay+ is now going international. Ant’s tech services business is also very well positioned for B2B contracts,” he said.
FOLLOWS MA’S RETURN TO CHINA
Founded by billionaire Jack Ma, Ant operates China’s ubiquitous mobile payment app Alipay and undertakes consumer lending and insurance products distribution among other businesses. In mid-2020, before its IPO was pulled, it was valued by some investors at more than $300 billion.
Since April 2021, Ant has been formally undergoing a sweeping business restructuring, which includes turning itself into a financial holding company that would subject it to rules and capital requirements similar to those for banks.
The announcement of the fine comes soon after China’s ruling Communist Party appointed central bank Deputy Governor Pan Gongsheng as the bank’s party secretary, a move two policy sources told Reuters would be a prelude to appointing him governor.
Pan is one of the main regulatory officials overseeing Ant’s revamp and has attended several meetings with the company about the fine and the revamp, according to the sources.
The National Financial Regulatory Administration (NFRA), a new government body under the State Council, is now the primary regulator to grant Ant the license, they added.
The NFRA did not respond to a Reuters request for comment. The PBOC did not respond to a request for comment on Pan’s role.
The sources had earlier said that the fine on Ant had been revised to at least 8 billion yuan. Reuters reported in April that Chinese regulators were considering fining Ant about 5 billion yuan, a lower sum than what they initially had in mind.
Ant’s fine is the largest regulatory penalty imposed on a Chinese internet company since ride-hailing major Didi Global was fined $1.2 billion by China’s cybersecurity regulator last year.
Alibaba was fined a record 18 billion yuan in 2021 for antitrust violations.
Ant’s penalty comes at a time Chinese authorities are keen to boost private sector confidence as the $17 trillion economy struggles to recover despite the lifting of zero-COVID curbs earlier this year.
It also follows the return to China of Ma earlier this year after spending many months overseas. Ma, who also founded Alibaba, withdrew from public view in late 2020 after giving a speech criticising China’s regulatory system, an event widely regarded as a trigger for the crackdown on industry.
He previously owned more than 50% of the voting rights at Ant, but in January it said he would give up control of the company as part of the revamp.
[ad_2]
Source link