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The Chinese central bank is trying to take control of Ant Group’s large amount of consumer loan data, marking the last front in Beijing’s crackdown on Jack Ma’s financial technology group.
Beijing wants to reduce the power of Ant Group and Ma, China’s best-known businessman, than it does largely gone from the public point of view since he publicly criticized state-owned banks and regulators in October. The company was forced to withdraw its initial $ 37 billion public offering, which is expected to be the largest in the world next month.
The People’s Bank of China wants Ant to transmit your data, one of the most valuable assets of Ma’s Internet empire, for a state-controlled credit scoring company that would be run by former central bank executives, according to people close to the negotiations.
The entity would also serve other financial institutions, such as state-owned banks, that compete with the fintech group’s lending operations.
Ant has insisted he should lead the new company, according to people close to the group. “Excessive government intervention will drag the industry down,” said a banker who has worked with Ant.
But the PBoC believed this would create a conflict of interest, according to people familiar with central bank thinking.
“The top priority is to make sure the new business fully complies with the regulations,” one of the people said. “The participation of the state will help [the PBoC] achieve this goal “.
The PBoC unveiled rules in January that require Chinese companies to get government approval before they are allowed to provide personal credit ratings. Only three licenses have been issued, all to state-controlled entities.
PBoC officials summoned Ant executives a meeting on April 12, when the group was told to apply for a license. Ant later confirmed that he would.
Authorities have also ordered the company to restructure and he fined Alibaba, Ant’s sister e-commerce group, with a record $ 2.8 billion this month.
Banks have long complained that Ant has benefited from not being subject to the same strict regulations to which they must adhere. The company has a dominant presence in China, with more than 700 million monthly users on Alipay, its mobile payment app.
The ant has evolved to also act as consumer loan platform, with Rmb1.7tn ($ 262 billion) of outstanding loans at the end of June 2020, more than any Chinese bank. The technology company charges banks a fee for any loan issued on their behalf.
“There is no doubt that Ant’s credit data is of great value to banks,” a former PBoC official said.
Another person familiar with central bank thinking said, “The ant must find a legal way to use its data. The solution is to configure a file [PBoC-approved] credit reporting company “.
But state control would threaten Ant’s ability to gather and analyze information about basic parts of its business, including consumer lending.
“Ant is eager to keep its most valuable assets,” said one person familiar with the negotiations.
The central bank will release a report as early as Sunday led by Wu Xiaoling, a former PBoC governor-general, to bolster its argument in favor of a state-controlled data company.
Ant declined to comment.
The PBoC did not respond to any requests for comment.
Ant supporters argue that existing credit-scoring agencies, all controlled by the government, they are malfunctioning.
The PBoC Credit Reference Center, a government agency, has been the subject of dozens of lawsuits in recent years for reporting inaccurate information and failing to update its data.
A person close to the CRC said his performance had suffered because he collects data through “administrative power”. Ant’s efforts have been based on Alipay’s popularity and Alibaba’s e-commerce platform. “Lenders have no incentives [give CRC] high quality information reports, ”the person said.
Baihang, another state-led credit information company in which Alibaba has an 8% stake, has gone worse. The agency is headed by a former PBoC official and has struggled to make a profit, in part because Alibaba, Tencent, the technology group that owns Alipay’s rival, WeChat Pay, and other shareholders have refused to share their data. with her.
The CRC made no comment.
Baihang did not respond to any requests for comment.
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