Months after Beijing’s regulators stepped in and forced Alibaba's finance arm Ant Group to restructure its consumer loans business, China's Banking and Insurance Regulatory Commission has granted the outfit permission to operate a consumer finance company.
The Commission's ruling details an ownership structure that sees Ant taking 50 percent stake worth four billion yuan (US$626M) in the new entity, which is called Chongqing Ant Consumer Finance Co. Ltd. Six other entities will together own the other half, in chunks ranging from 10 percent to 4.99 percent.
The company will be allowed to issue personal loans and bonds, borrow domestically, sell insurance and also enable business operations for Alibaba’s two credit subsidiaries, Huabei and Jiebei.
The implications of the structure are that Ant Group will have to label which financial institution gave the loan and any Huabei and Jiebei loan will need to partly be underwritten by the consumer finance company.
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Issuance of the license comes after Beijing's November 2020 decision to prevent Ant Group from conducting the world’s largest-ever IPO two days before it was scheduled, citing regulatory concerns over the firm's lending business.
In April this year, China ordered Alibaba’s Ant Group to become a financial holding company out of concern that technology firms acting as finance companies threaten financial stability.
However, relations between Beijing and Jack Ma’s empire appeared to warm after Ant Group was welcomed into trials of China’s digital yuan a few weeks ago.
As one might predict, Chongqing Ant Consumer Finance Company will be domiciled in Chongqing. ®