Ant expands online loan-backed debt sales after crackdown

Ant Group Co. has suspended issuance of loan-backed securities online as financial technology giant Jack Ma reorganizes its operations to comply with tough new industry rules, people familiar with the matter said.

Ant has no plans to issue asset-backed securities anytime soon, the people said, asking not to be named as the matter is confidential. Shanghai Stock Exchange said on Tuesday that sales of two ABSs totaling 18 billion yuan ($ 2.8 billion) by Ant units had been halted, without giving any reason.

The company is scaling back its consumer credit business after a crackdown on the sprawling fintech firm, which also derailed its record-breaking initial public offering. In April, Ant presented a plan to radically reorganize its business and submit to more bank-like oversight – a move that will lead to more capital requirements and regulatory scrutiny.

Last year, the government also released rules limiting the amount that online platforms can collect through securitization.

Authorities vowed to curb the “reckless push” of tech companies into finance and introduced a series of measures that threatened to restrict Ant’s dominance in everything from online payments to consumer loans and management. heritage.

A representative for Ant declined to comment.

Among the regulations expected to affect Ant the most is the rule drafted by the banking regulator in November to impose a 30% funding requirement on online lenders when they jointly issue loans with traditional banks. Ant’s Jiebei and Huabei units had provided 1.7 trillion yuan in consumer loans to 500 million people as of June 30.

The company only kept about 2% of its balance sheet, with the rest being financed by third parties or packaged in the form of securities and resold. Ant had more than 170 billion yuan of consumer loan-backed ABS outstanding as of October, according to Huajin Securities Co.

Francis Chan, senior analyst at Bloomberg Intelligence, estimated that Ant may need to inject up to 80 billion yuan into its two consumer credit units to comply with new regulations on funding and leverage.

Ant is not the only one facing the crackdown. The government has imposed sweeping restrictions on the financial divisions of 13 companies, including Tencent Holdings Ltd. and ByteDance Ltd. .

The regulator has set different deadlines for various financial services with the longest grace period not exceeding two years, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in March, without giving details.

Still, Ant’s profits rose 50% to $ 3.4 billion in the December quarter, up 50% from the previous three months.

– With the help of Charlie Zhu, Zheng Li and Jun Luo

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