Business & Economy

Chinese regulators summon Jack Ma, Ant executives before IPO

Beijing, Nov 3 (efe-epa) – The Chinese stock exchange regulator and central bank, as well as two other institutions, summoned Jack Ma – the country’s richest man -, who is majority shareholder of Ant Group, Alibaba’s financial technology subsidiary, which is set to record the biggest ever initial public offer or IPO on Thursday.

A statement released by the China Securities Regulatory Commission (CSRC) said that this regulatory interaction would also be attended by the People’s Bank of China (PBC), China Banking and Insurance Regulatory Commission (CBIRC) and the State Administration of Foreign Exchange.

Along with Ma, founder and former head of e-commerce giant Alibaba, Ant’s CEO Eric Jing and chief executive Simon Hu also have been summoned.

Do far, no details of the meeting has been made known, however Caixin news portal quoted company representatives stressing that Ant “will implement the meeting opinions in depth.”

The Hangzhou-based fintech company, an affiliate Alibaba Group Holding, said that they would continue to follow the guidelines of “stable innovation, embracing supervision, service to the real economy and openness for mutual benefit.”

Ant is the operator of Alipay, China’s largest electronic payments platform, although in recent years it is extending its businesses into sectors such as loans or insurance.

Ma’s appearance before the authorities comes just days after he criticized the global and local financial regulations, comparing the Basel Accords, which set out capital requirements for banks, to a club for the elderly, and questioning if that was what the Chinese financial system needed.

“The Basel Accords are intended to treat diseases of an ageing banking system, it is a medicine for old people … but China’s financial system is still in its youth,” said Ma, according to local media.

China, he said, needs alternative funding channels beyond the large state banks. “Big banks are like big rivers … but we need ponds, creeks and small channels in the system. Without these in an ecosystem, floods and droughts will always happen here and there.”

Ma, criticizing excessive bureaucracy in the financial system, said conventional banking businesses in China were run like “pawn shops,” and that future lending decisions should be decided by big data and credit records instead of sufficient collateral to make loans.

On Monday, without mentioning Ant, the CBIRC and the PBC published a draft regulation for microcredit technologies that includes restrictions on leverage and establishes a base for capital contribution on the part of the company itself.

According to Caixin, Alipay’s two subsidiaries dedicated to these businesses, Huabei and Jiebei, will have to replenish capital or reduce the size of their loans if they want to comply with the measures, which could also mean that the company will end up eliminating these two services from the main platform.

On Tuesday, the portal reproduced a text by the head of the CBIRC Consumer Protection Office, Guo Wopping, in which he spoke of the lack of uniform standards for techno-finance and gave the example of Huabei.

“It’s almost the same as the bank credit card business, but its installment payments are higher than banks, which is incompatible with the concept of inclusive finance,” he said.

Ant has attracted a huge interest from investors ahead of its IPO, in which it expects to raise some $34.5 billion and which could even rise to over than $39.5 billion if the greenshoe option is exercised.

The share price set by the Ant for its simultaneous launch in Hong Kong and Shanghai stock exchanges would lead to the company being worth more than $313 billion. EFE-EPA


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