Please take a look at this paragraph from the story below, and tell me that Ratland, and with it the world economy, is not on the edge of a precipice.
"The proposed measures, which call for platform operators to provide at least 30% of the funding for loans, would render many of Ant’s existing transactions non-compliant. The company currently keeps about 2% of loans on its own balance sheet, with the rest funded by third parties or packaged as securities and sold on."
- Regulator plans to discourage lenders from working with Ant
- Authorities abruptly halted the fintech giant’s IPO on Tuesday
The shock suspension of Ant Group Co.’s $35 billion initial public offering is just the beginning of a renewed campaign by China to rein in the fintech empire controlled by Jack Ma.
Authorities are now setting their sights on Ant’s biggest source of revenue: its credit platforms that funnel loans from banks and other financial institutions to millions of consumers across China, according to people familiar with the matter.
The China Banking and Insurance Regulatory Commission plans to discourage lenders from using Ant’s platforms and has already asked some to ensure their portfolios are compliant with stringent draft regulations announced on Monday, said the people, who asked not to be identified discussing private information.
The proposed measures, which call for platform operators to provide at least 30% of the funding for loans, would render many of Ant’s existing transactions non-compliant. The company currently keeps about 2% of loans on its own balance sheet, with the rest funded by third parties or packaged as securities and sold on.
The full scope of China’s plans for Ant are unclear, and it’s possible that lenders will continue to work with the company once it complies with regulators’ requests. Any suggestion that banks would stop using its platforms is “unsubstantiated,” Ant said in a response to questions from Bloomberg. “Ant will continue to support bank partners to make independent credit decisions and leverage Ant’s technology platforms to serve consumers and small businesses.”
The CBIRC didn’t immediately respond to a request for comment. Shares of Alibaba Group Holding Ltd., which owns a third of Ant, fell 6.3% in Hong Kong as of 2:31 p.m.
“From the perspective of regulators and investors, they all need Ant to provide a better disclosure on the co-lending business,” said Chen Shujin, Hong Kong-based head of China financial research at Jefferies Financial Group Inc. “Ant needs to be aligned with regulations going forward and show that its business model can help lower borrowing costs for the economy rather than raising them with some kind of monopoly.”
China abruptly halted Ant’s IPO after summoning Ma to a meeting earlier in the week to outline an array of concerns and new regulations. President Xi Jinping’s government is tightening controls on Ant and other fast-growing financial conglomerates after years of allowing them to operate without capital and leverage requirements imposed on banks.