Ant wants to appease authorities with corporate restructuring

NAfter massive pressure from the authorities, according to insiders, the Chinese financial group Ant is considering restructuring the group. The majority of the online financing business should therefore be brought into a holding that would be regulated like a traditional financial company, said two people familiar with the matter to the Reuters news agency.

With Alipay, Ant operates the dominant payment service in China and also offers loans, insurance and wealth management services via apps. At first it remained unclear whether Alipay, the group’s second most important source of revenue after consumer loans, should also be incorporated into the holding company.

The Chinese central bank announced that Ant was drafting a plan to set up a financial holding company. The company must ensure that all of its financial operations are regulated. Ant controls several financial institutions, including securities and insurance firms, and is legally obliged to create a financial holding company. Ant declined to comment on the news agency.

After the regulatory authorities stopped the IPO, which would have become the world’s largest with an issue volume of 37 billion dollars, two days before its debut in Shanghai and Hong Kong in early November, the Chinese central bank demanded a specific plan from Ant a few days ago, such as the requirements regulatory authorities could be met. Central bank vice Pan Gongsheng had asked the management after a meeting to stop illegal financial activities in the credit, insurance and asset management business. As a result, Ant announced on Sunday that he would set up a working group on this topic.

For years, the authorities had barely regulated financial platforms in China, but are now tightening the thumbscrews. The dominance of Ant and the Chinese Internet giant Tencent with its payment service Wechat Pay, through which a large part of the payment transactions are processed, is obviously disturbing them. Ant founder Jack Ma had also made no friends with criticizing the regulation in China, which inhibits innovation.

The Ant parent company Alibaba, founded by Ma, is also under pressure after the Chinese authorities have launched an investigation into the online giant for alleged violations of competition law. The group is suspected of “monopoly practices”.

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