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According to a Financial Times article published on Monday 13th September 2021, Beijing intends to split off Ant Group’s Alipay and develop a separate app for the fintech giant’s loans division. Ant was previously compelled by regulators to separate its AliPay and Huabei and Jiebei loan operations. According to the Financial Times, they now want to separate the credit firms into their own app.
According to the proposal, Ant would hand over user data that underpins lending decisions to a new credit score joint venture, which cited sources familiar with the process and the JV would be partially owned by the government. Following the FT article, Alibaba, Ant Group’s e-commerce subsidiary, saw its Hong Kong-listed shares drop more than 4% Monday afternoon. The Hang Seng IT index fell over 3% as a result of the drop, and shares of other Chinese tech heavyweights like Tencent and Meituan also took a hit.
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According to Reuters, state-backed businesses are expected to acquire a significant part in the credit-scoring joint venture, with Ant and Zhejiang Tourism Investment Group each controlling 35 percent. Ant will not be the only Chinese online lender harmed by the new regulations. Ant’s firm is facing new problems as a result of recent events. The company’s planned $34.5 billion initial public offering (IPO) in November was canceled when regulatory issues were discovered. Months of regulatory pressure on China’s digital behemoths followed, with Beijing enacting a series of anti-monopoly and data security and protection regulations.
Ant Group was required by authorities in April 2021 to restructure its operations, including forming a financial holding company and separating its payment app Alipay from its credit products. In the same month, Chinese regulators fined Alibaba a whopping 18.23 billion yuan (about $2.8 billion) in an anti-monopoly probe against the internet titan for suspected market dominance abuse. Alibaba’s Hong Kong stock has dropped more than 27% since the beginning of the year as of Friday’s closing.