China’s high banking watchdog doubled down on a renewed push to rein in monetary expertise firms similar to Ant Group Co., promising to eradicate monopolistic practices and strengthen danger controls within the business.
Liang Tao, a vice chairman of the China Banking and Insurance coverage Regulatory Fee, mentioned at a convention in Beijing on Wednesday that fintech firms don’t change the character of the monetary business and regulators needs to be attentive to the dangers and challenges of digitization. Corporations needs to be topic to the identical supervision and danger administration necessities as banks, he mentioned.
Liang’s feedback add to a widening crackdown on fintech corporations, which final week derailed Ant’s $35 billion preliminary public providing. Regulators have roiled markets with a spate of latest guidelines to curb their dominance and in addition focused web behemoths similar to Tencent Holdings Ltd. and Alibaba Group Holding Ltd., which owns a 3rd of Ant.
Utilizing huge information gleaned from their maintain on on-line funds, Ant and corporations similar to Tencent have grabbed market share from business banks within the profitable client lending area by offering simpler entry to credit score for youthful customers on-line, lots of whom have little revenue nor credit score historical past.
CBIRC known as for higher training for debtors and bans on inducing clients to borrow past their wants and means. In areas the place a market monopoly may be noticed, the regulator will step up probes to make sure truthful competitors and market order, Liang mentioned.
Licensed monetary establishments must also assess the dangers of their companions and are restricted from outsourcing their data expertise, danger administration and inside auditing, Liang mentioned.
Different audio system on the convention, together with executives from Industrial & Industrial Bank of China Ltd. and Beijing Monetary Holdings Group, joined within the clampdown refrain.
Fang Wenzhong, chairman of Beijing Monetary and a former CBIRC director, mentioned not one of the monetary improvements have eradicated and even decreased dangers. He mentioned the Basel Accords weren’t outdated, however developed from the teachings of the previous monetary disaster.
These feedback have been in response to a speech late final month by Ant’s billionaire founder Jack Ma, who in contrast the Basel capital guidelines to a membership for the aged. Ant, which operates the Alipay funds app, additionally spans lending, asset administration and insurance coverage.
Weeks after that speech, Ma was known as in to a joint assembly with regulators and instructed that Ant will probably be handled as a monetary holding firm and topic to capital and leverage laws much like banks, based on folks aware of the matter. The IPO was then known as off.
“We believe the focus of this round of tightening will be establishing a new group-level regulatory framework for quasi-financial holding companies and improving and expanding the current regulations covering credit-related businesses,” Daiwa analysts led by Leon Qi wrote in a notice on Tuesday.
— With help by Charlie Zhu, Jun Luo, and Zheng Li
(Updates with extra govt feedback within the eighth paragraph.)