Exclusive-China to end Ant Group’s regulatory overhaul with at least $1.1 billion fine

By Julie Zhu and Jane Xu

HONG KONG (Reuters) – Chinese authorities are expected to impose a fine of at least 8 billion yuan ($1.1 billion) on Ant Group as early as Friday, sources with direct knowledge of the matter said, ending years of fintech. lengthy regulatory overhaul.

The People’s Bank of China (PBOC), which led Ant’s overhaul after its $37 billion IPO was scuttled in late 2020, is expected to disclose the fine in the coming days, the sources told Reuters.

The sanction, which would be one of the largest fines ever imposed on an internet company in the country, will help pave the way for the fintech company to obtain a financial holding license, seek growth and possibly revive its scholarship projects. beginning.

For the wider tech sector, a fine from Ant would mark a key step towards concluding China’s brutal crackdown on private companies that began with the scrapping of Ant’s IPO and then erased billions of dollars in the market value of several companies.

Ant and the PBOC did not immediately respond to a Reuters request for comment. The sources did not wish to be named as they were not authorized to speak to the media.

Founded by billionaire Jack Ma, Ant’s business includes payment processing, consumer lending and the distribution of insurance products. In mid-2020, before its IPO was pulled, it was valued by some investors at over $300 billion.

As of April 2021, Ant is officially undergoing a radical restructuring of its business, which includes its transformation into a financial holding company that would subject it to rules and capital requirements similar to those of banks.

Any announcement of the fine on Ant would come shortly after China’s ruling Communist Party appointed central bank Deputy Governor Pan Gongsheng as the bank’s party secretary, a move two political sources have said. told Reuters would be a prelude to his nomination as governor.

He is one of the key regulatory officials overseeing Ant’s redesign and has attended several meetings with the company about the fine and the redesign, the sources say.

The National Financial Regulatory Administration (NFRA), a new government agency under the State Council, is now the primary regulator to license Ant, the sources said.

The NFRA did not immediately respond to a request for comment from Reuters. The PBOC also did not immediately respond to a request for comment on Pan’s role.


The final fine amount has been revised to at least 8 billion yuan, the sources said. Reuters reported in April that Chinese regulators were considering fining Ant around 5 billion yuan, a lower sum than they had originally expected.

Ant’s fine would be the heaviest regulatory penalty imposed on a Chinese internet company since major Didi Global was fined $1.2 billion by China’s cybersecurity regulator last year.

Fintech subsidiary e-commerce titan Alibaba Group was fined a record 18 billion yuan in 2021 for violating antitrust laws.

A fine on Ant would come at a time when Chinese authorities are keen to bolster private sector confidence as the $17 trillion economy struggles to recover despite the lifting of zero-COVID restrictions earlier this year.

It would also follow Ma’s return to China earlier this year after spending many months abroad. Ma, who also founded Alibaba, retired from public view in late 2020 after delivering a speech criticizing China’s regulatory system, an event widely seen as a trigger for the crackdown on the industry.

He previously held more than 50% of the voting rights at Ant, but in January he announced he would relinquish control of the company as part of the overhaul.

($1 = 7.2439 Chinese yuan renminbi)

(Reporting by Julie Zhu and Jane Xu; Editing by Muralikumar Anantharaman)

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