The Chinese authorities levied a hefty fine of $984m on Ant Group for breaching consumer protection and corporate governance laws, according to a report from Reuters.
This fine, one of the biggest ever imposed on an internet company in China, signifies the culmination of a prolonged regulatory overhaul of the FinTech giant.
This rectification was propelled by the People’s Bank of China (PBOC), which initiated the reformation after the halting of Ant’s $37bn IPO in 2020.
Securing the penalty is instrumental in aiding Ant Group’s future ambitions, including acquiring a financial holding company license, fuelling growth, and rekindling plans for a stock market debut.
The fine represents a crucial stride in concluding China’s stringent crackdown on private enterprises. This campaign, initiated by the cancellation of Ant’s IPO, has significantly depreciated the market value of numerous companies in the tech sector.
Reuters earlier reported that PBOC intended to announce the fine as early as Friday, according to sources. Ant, however, has yet to issue any comments on the matter.
Post the PBOC’s announcement, premarket trading saw Hong Kong-listed shares in Alibaba Group, Ant’s affiliate, rise by 3.3%.
Founder of Beijing-based Lens Consulting, Rukim Kuang, mentioned that finalising penalties, elucidating expectations and setting firm compliance boundaries are pivotal in stabilising the confidence of the private sector.
Ant, founded by billionaire Jack Ma, offers services spanning payment processing, consumer lending and insurance products distribution. Valued at over $300bn by some investors in mid-2020, Ant has been undergoing extensive business restructuring since April 2021. This transformation involves Ant converting itself into a financial holding company, subjecting it to similar regulations and capital requirements as banks.
This announcement follows the recent appointment of central bank Deputy Governor Pan Gongsheng as the bank’s party secretary by China’s ruling Communist Party. Two policy sources informed Reuters that this move would lead to Pan’s promotion to governor.
Pan has been one of the principal regulatory officials overseeing Ant’s transformation and has attended several meetings regarding the fine and the overhaul.
Ant’s mammoth fine is the largest regulatory penalty imposed on a Chinese internet company since ride-hailing giant Didi Global was slapped with a $1.2bn fine last year by China’s cybersecurity regulator.
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