China’s central government is considering regulations that would slow growth rates for financial holding companies, including auto lenders such as Ant Financial, Bloomberg News reported Monday.
The government has long promoted growth but is shifting into “risk-control mode” amid concerns that Ant Financial has become too big to fail, according to the report. The proposed regulations would require any company that straddles at least two financial industries to obtain licenses from China’s central bank and meet minimum capital requirements for the first time.
China has not been entirely clear on which other companies would have to abide by these new rules, but Ant Financial competitor Tencent Holdings Ltd. — a social media platform that’s branching into financial services — is also expected to be affected.
More than 870 million customers rely on Ant Financial products including online payments, insurance, lending, credit scores, and asset management.
Last month, Chinese car retail website SouChe announced the expansion of its finance program to reach 1,700 dealerships in partnership with Ant Financial. In 2016, Ant Financial led a $100 million Series C funding round for SouChe, and in 2017 Alibaba Group Holding Ltd. led a $335 million Series E funding round to make it the largest investor in the car retail platform.
Ant Financial is an affiliate company of Alibaba. In conjunction, these three companies look to integrate business resources and incorporate Alibaba’s e-commerce, in addition, to jointly building a new retail and new finance platform for automobiles, Auto Finance News previously reported.
In response to questions from Bloomberg News, representatives for Ant Financial said that its “principle has always been to work closely with regulators and support the healthy development of China’s financial sector.”
Ant Financial declined to provide additional comment to AFN.
