Is the Ant Group shake-up a sign of things to come?

The move comes about a month after regulators scuppered the company’s listing on the Hong Kong and Shanghai exchanges.To get more latest ant group news, you can visit shine news official website.
Some see the move as a vengeful communist party lashing out at the company’s outspoken founder Jack Ma.
But analysts note that reforming the financial sector is a long-standing policy goal, and other companies could also end up in the crosshairs of regulators.
"Ant Financial is the first cab off the rank when it comes to these new requirements and an increased level of scrutiny,” said Michael Norris, research and strategy lead at AgencyChina.
"While the talk about palace intrigue between Jack Ma and his various detractors is titillating, it does ignore that policy environment where slowing up the build-up of risk is clear and resolute as a priority.”Ant Group is China’s biggest payments provider, with more than 730 million monthly users on its digital payments service Alipay. But it’s the company’s lending practices that appears to worry the regulators more.
Ant acts as a marketplace for loans. It takes a fee to match borrowers with banks, who then take on the risk.Over the weekend central bank officials met with executives from Ant Group, and ordered the company to "rectify” its lending, insurance and wealth management services.
According to People’s Bank of China (PBOC) Vice Governor Pan Gongsheng, regulators drew attention to Ant’s poor corporate governance, defiance of regulatory demands and its use of its market size to squeeze out competitors.
Ant was urged to return to its origins as a payments business, and to enhance transaction transparency and avoid unfair competition.Mr Pan also said Ant should be properly licensed to operate a credit business, should establish a holding company, and must ensure capital adequacy.
Under draft rules published by the People’s Bank of China in November, online lenders must provide at least 30% of any loan they fund jointly with banks.
In other words, under the new rules Ant Group will be expected to behave a little more like a traditional lender.
Hangzhou-based Ant Group said in a statement it would establish a "rectification” working group and fully implement regulatory requirements.Mr Norris said it appears the regulators are worried that easy credit could mean investors will borrow on margin to make risky investments in shares.
This isn’t a new concern in China. Easy access to credit helped fuel share market turbulence in 2015, when some investors were unable to repay their margin loans after a share market rout.
Also, if Ant Group bears none of the risk, then its main incentive is to process as many loans as possible, with little regard to the effect they might have on the lending institutions that actually underwrite them.

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