13 sep 2021 10:22 GMT
At the same time, the data supporting the loan decisions are required to be handed over to a new credit rating joint venture, part of which would be owned by the state.
The Chinese authorities plan to split up the country’s largest payment platform, Alipay, owned by Ant Group, in order to create a separate application especially intended for the loan business, the Financial Times reports, citing sources familiar with the matter.
Following this news, shares of Chinese e-commerce giant Alibaba, affiliated with Ant Group, fell more than 5% on the Hong Kong stock exchange on Monday.
Previously, Chinese regulators had already ordered Ant Group to separate two loan businesses – Huabei, similar to a credit card, and Jiebei, a small loan service – from other financial services. Now, loans, for the moment fully integrated into Alipay and which, according to Ant Group, allows making credit decisions in just a few seconds, will be transferred to a separate application.
Under the new project, the authorities require the Chinese company to hand over the user data that support its loan decisions to a new credit rating joint venture, part of which would be state property. As revealed by Reuters, in the joint entity, two companies – Ant Group and Zhejiang Tourism Group – each will have a 35% stake, while several private and government partners will receive smaller stakes.
In this way, Ant Group would no longer be able to independently assess the creditworthiness of its clients, a fact that could slow the growth of its financial services.
The decision by Chinese regulators comes amid scrutiny of the country’s tech sector. The new project is reportedly aimed at reducing the power of big tech companies that supposedly lies in your control over the data.