China will reportedly break up Ant Group’s Alipay and force creation of new loans app

 

Wednesday, January 20, 2021, at the Hangzhou headquarters of Ant Group Co., China.

Bloomberg/Getty Images’ Qilai Shen

According to a Financial Times report on Monday, Beijing plans to split up Ant Group’s Alipay and create a separate app for the company’s loans business.

When regulators asked Ant to separate AliPay from its lending operations Huabei and Jie Bei, the company complied with their request. According to the FT, they now want the credit businesses separated into their own app as well.

The FT quoted people familiar with the plan as saying that Ant intends to hand over user data used to support loan decisions to a new credit scoring joint venture. According to the report, the JV will be partially state-owned.

Shares of Ant Group’s e-commerce subsidiary Alibaba, which is listed in Hong Kong, dropped more than 4% on Monday afternoon as a result of the FT story. There were losses across the board in China’s tech sector as the Hang Seng Tech index fell almost 3%, with shares of Tencent and Meituan also falling.

According to Reuters, Ant and Zhejiang Tourism Investment Group will each own 35% of the credit-scoring joint venture, which is backed by the Chinese government.

According to the Financial Times, Ant will not be the only Chinese online lender affected by the new regulations.

Ant’s business faced new challenges as a result of the recent developments. The $34.5 billion initial public offering (IPO) that had been scheduled for November was called off after regulatory irregularities were discovered.

Anti-monopoly and data security and protection rules have been implemented in China since then as part of an ongoing regulatory crackdown.

CNBC Pro has a wealth of information on China.