Chinese authorities have announced a fine of 7.12 billion yuan ($984 million) for Ant Group (688688.SS) for violating consumer protection and corporate governance laws. This is one of the largest fines ever imposed on an internet company in China. The fine marks the end of a regulatory overhaul of the fintech company that has been driven by the People’s Bank of China (PBOC) since Ant shelved its IPO in late 2020. The PBOC announced the penalty in a statement on its website. The penalty is expected to help Ant secure a financial holding company license and revive its plans for a stock market debut. The fine is also significant for the broader technology sector as it represents a step towards the conclusion of China’s regulatory crackdown on private enterprises.
According to RushHourDaily, the PBOC intended to unveil the fine on Friday. Ant has not yet responded to requests for comment. Following the announcement of the penalty, shares in Ant’s affiliate, Alibaba Group (9988.HK), rose 3.3% in premarket trading. Rukim Kuang, founder of Beijing-based Lens Consulting, stated that the Chinese government’s moves to clarify penalties and compliance boundaries are crucial for stabilizing private sector confidence.
Ant Group, founded by billionaire Jack Ma, is involved in payment processing, consumer lending, and insurance products distribution. Before its IPO was pulled, it was valued at over $300 billion. Since April 2021, Ant has been undergoing a business restructuring to become a financial holding company. The announcement of the fine coincides with the appointment of Pan Gongsheng as the party secretary of the PBOC, which is seen as a prelude to appointing him governor. Pan has been overseeing Ant’s revamp and has been involved in discussions about the fine. The National Financial Regulatory Administration (NFRA) is now the primary regulator responsible for granting Ant the license.
The fine imposed on Ant is the largest regulatory penalty ever imposed on a Chinese internet company, surpassing the record fine of 18 billion yuan imposed on Alibaba in 2021 for antitrust violations. The penalty comes at a time when Chinese authorities are aiming to boost private sector confidence as the economy continues to struggle. It also follows Jack Ma’s return to China earlier this year after a period of absence. Ma withdrew from public view after criticizing China’s regulatory system, which is believed to have triggered the regulatory crackdown. Ma has relinquished control of Ant as part of the company’s revamp.
