BEIJING - Now that Ant Group Co. Ltd.'s would-be record initial public offering is on ice, what's next for the high-flying fintech behemoth and investors who hoped to make a quick killing?
How regulators put Ant Group's booming online credit business under oversight will set an example for regulation of the rest of the industry, a person close to China's central bank said. Regulators said the toughened rules aim to"regulate the online micro-finance operations of micro-lenders, prevent risks from online micro loans, protect the legal rights and interests of microlenders and clients, and promote the healthy development of the online micro-finance business."
At a high-level financial summit in Shanghai, Mr Ma compared the Basel Accords, which set out global capital requirements for banks, to a club for the elderly and blasted regulators for not paying sufficient heed to development and opportunities for the young. Mr Ma's comments apparently caught the attention of regulators. One week after the summit, the State Council, China's cabinet, at a meeting emphasised the importance of regulatory oversight and risk control treating all business players fairly.
The booming online micro-lending sector backed by fintech companies remains a key concern of regulators due to risks of excessive leverage. Changes in fintech industry regulations will have a"huge impact" on Ant Group's operational structure and profit model, said the China Securities Regulatory Commission in a statement backing the Shanghai bourse's decision to suspend the offering.
The two platforms are operated by companies registered in the municipality of Chongqing in Southwest China - Chongqing Ant Shangcheng Micro Loan Co Ltd and Chongqing Ant Small and Micro Loan Co Ltd. Online micro-lenders should fund at least 30 per ccent of any joint loan with financial institutions, according to the draft, which doesn't specify what the percentage is currently.According to Ant Group's prospectus, about 1.75 trillion yuan of loans issued through its online credit platforms were through cooperation with banks. Ant Group helped market about two-thirds of the loans while putting its own money into the rest.
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