Ant Group, which is owned by Chinese billionaire Jack Ma, is restructuring itself as a financial holding company under the authority of China’s central bank. According to a report, the move is supposedly a response to pressure from the Chinese government to keep in line with financial regulations.
Chinese regulators had reportedly told Ant which has mainly described itself as a technology company for years to become a financial holding company entirely, which means it will be subjected to more stringent capital requirements.
This would subject Ant to similar regulations that banks have to abide by, which might affect its growth and profitability. The move was not planned by the company’s top executives in its initial stages as Ant said it wanted one of its subsidiaries to become a financial holding company. Ant is the fintech spinoff from Alibaba that operates the Alipay mobile payments and lifestyle app which has more than one billion users in China.
According to a report, Chinese officials with knowledge of the matter, the decision was reportedly made by Chinese President Xi Jinping himself. Xi had reportedly learned of the speech made by Ma at a Shanghai event, which government officials saw as an attempt to tarnish the reputation of regulators by criticizing them for holding back technology development.
This apparently stirred Xi’s ire, which led to the decision. As Ma tries to get back into Beijing’s good graces, similar moves to fall in line with government-mandated measures are to be expected.
Sources: The Wall Street Journal