Ant Group’s consumer credit unit has been granted permission to start operating in Chongqing City, the local banking supervisory body said Thursday.
The approval comes nearly two months after Chinese regulators forced a sweeping restructuring on Jack Ma’s fintech conglomerate, signaling a step forward in overhauling the group’s lucrative consumer lending business.
The unit, Chongqing Ant Consumer Finance Co Ltd, has registered capital of 8 billion yuan ($ 1.25 billion), according to a statement from the Chongqing office of the China Banking and Insurance Regulatory Commission (CBIRC). .
Ant has made a capital contribution of 4 billion yuan for a 50% stake, while the Hong Kong-based Nanyang Commercial Bank has a 15% stake while the Cathay United Bank of Taiwan has a 10% stake, he indicated.
Other co-founders include battery maker CATL (300750.SZ) and intelligent transportation services company backed by Alibaba China TransInfo Technology (002373.SZ) and China Huarong Asset Management Co (2799.HK).
“Under the leadership of regulators, Ant will work with other shareholders … to meet the needs of consumers and continue to improve the quality of financial services and risk management capabilities,” Ant said in a statement to Reuters Thursday.
In April, Chinese regulators asked Ant to do a major overhaul of its business, including transforming Ant itself into a financial holding company and consolidating its two lucrative microcredit firms Jiebei and Huabei into the new company of Consumer credit.
“Ant must complete the restructuring of the Huabei and Jiebei brand within 6 months of the start of operations for its consumer finance company,” China’s 21st Century Business Herald reported Thursday, citing a CBIRC regulator.
“Ant’s two microcredit entities are expected to withdraw from the market in an orderly fashion after the restructuring of the company,” he added.
The unit is expected to further strengthen its capital base as Ant prepares to fall back on its lucrative microcredit business to meet regulatory capital adequacy requirements, Reuters reported in February. Read more
($ 1 = 6.3912 yuan Chinese renminbi)
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