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Ant Group's Regulatory Overhaul Will Be Stopped By China With A Fine Of At Least $1.1 Billion

Ant Group's Regulatory Overhaul Will Be Stopped By China With A Fine Of At Least $1.1 Billion
The Chine fintech company' - Ant Group's years-long regulatory revamp will likely come to an end when Chinese regulators impose a fine of at least 8 billion yuan ($1.1 billion) on Ant Group, according to sources with direct knowledge of the situation.
According to Reuters' sources, the People's Bank of China (PBOC), which has been driving Ant's transformation since its $37 billion IPO was abandoned in late 2020, is anticipated to announce the fine soon.
The fine, which would rank among the highest ever assessed against an online company in the nation, will help the fintech startup get the financial holding company licence it needs to pursue expansion and, eventually, resurrect its plans to list on the stock market.
An Ant fine would be a significant step towards the end of China's brutal crackdown on private enterprises, which started with the cancellation of Ant's IPO and has since reduced the market value of numerous companies by billions.
An inquiry for comment from Reuters went unanswered by Ant and the PBOC. Due to their lack of authorization to speak to the media, the sources declined to give their names.
Ant, a company founded by billionaire Jack Ma, engages in a variety of enterprises, including the marketing of insurance goods and the processing of payments. Before its IPO was cancelled in the middle of 2020, some investors valued it at more than $300 billion.
An extensive business restructuring that Ant has been legally pursuing since April 2021 includes converting it into a financial holding company that would subject it to regulations and capital requirements comparable to those for banks.
Any declaration of the penalty against Ant would follow shortly after China's ruling Communist Party selected Pan Gongsheng as the bank's party secretary, a move that, according to two policy sources, would be a step towards making him governor.
According to the sources, he has participated in multiple discussions with the company regarding the fine and the revamp and is one of the key regulatory officials supervising Ant's redesign.
According to the sources, the National Financial Regulatory Administration (NFRA), a new government agency under the State Council, is now the main regulator responsible for approving Ant's licence.
A Reuters request for comment received no immediate response from the NFRA. When contacted for comment regarding Pan's function, the PBOC did not right away provide it.
According to the sources, the total fine has been increased to at least 8 billion yuan. Chinese regulators were reportedly considering fining Ant 5 billion yuan, which was less than what they had originally planned, according to Reuters in April.
Since Didi Global, the world's largest ride-hailing operator, was fined $1.2 billion by China's cybersecurity authority last year, Ant's fine would be the greatest regulatory sanction ever on a Chinese internet company.
The e-commerce giant Alibaba Group (9988.HK), a subsidiary of the fintech company, was fined a record 18 billion yuan in 2021 for antitrust offences.
The imposition of a fine on Ant would take place at a time when Chinese officials are eager to increase private sector confidence as the $17 trillion economy still has trouble recovering despite the lifting of zero-COVID curbs earlier this year.
It would also occur following Ma's return to China earlier this year after a lengthy absence. Ma, who also created Alibaba, disappeared from the public eye in late 2020 following a speech in which he criticised China's regulatory framework. This statement is widely considered as the catalyst for the crackdown on industry.
Prior to the redesign, he held more than 50% of the voting rights at Ant, but in January it was announced that he would cede control of the business.

Christopher J. Mitchell

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