Jack Ma Put in His Place: This Anthill is Being Flattened. [Ken Wu]

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This anthill is being flattened. 

Ant Financials, a group controlled by Alibaba, has been positioning itself as a technology and internet company and NOT a financial institution, and up to now is offering online banking, securities, insurance, credit and other financial services without complying with China's financial regulations, including capital sufficiency requirements. 

On October 24 at the Shanghai Financial Summit, Jack Ma launched a blistering public attack on Chinese financial watchdogs and banks.

"In China, it is not a problem of systemic financial risk because China's financial sector does not have a system," he smugly proclaimed.  (Did he mean except for Ant Financials?)

"The regulatory system in China is stifling innovation and must be reformed to fuel growth," he continued, as China's financial regulators sat listening. (Was that a demand for regulators to leave Ant alone, let it do what it wants, and even to regulate itself?)

Finally, Jack Ma proclaimed that "Chinese banks operate with a pawnshop mentality." (Was he implying that Ant, having what he claimed as "risk-free credit innovation", should be allowed to expand without limits to replace banks?)

After summoning Jack Ma for a meeting in Beijing, which resulted in the cancelation of Ant Financials' IPO, the biggest in history, all four financial regulators summoned the CEOs of Alibaba and Ant Financials for a second meeting. 

Afterwards, here is their public answer to Jack Ma's power play:

"The Ant Group has been asked to return to original business as a payment services provider and enhance the transparency of transactions, and the group is strictly prohibited from unfair competition.

The company should carry out individual credit reporting business that is compliant with laws and regulations, and should protect personal data privacy.

Ant Group must set up a financial holdings company in accordance with laws, strictly implement supervision requirements, and ensure capital sufficiency and legality of relevant businesses.

The company should also improve corporate governance, strictly rectify illegal credit loans, insurance, wealth management and other financial activities. It must also operate securities and funds businesses in accordance with laws and regulations, strengthening governance of securities institutions and carry out asset securitization businesses in compliance with regulations.

In addition, regulators will resolutely break monopolies, rectify, investigate, and punish unfair competition, put all financial activities under supervision, and exercise zero tolerance for all kinds of law-breaking behaviors".

The message is crystal clear.  There will not be a "Lehman 2.0" in China.


Also a Guardian Article:

China orders Alibaba founder Jack Ma to break up fintech empire

https://www.google.com/amp/s/amp.theguardian.com/business/2020/dec/28/china-orders-alibaba-founder-jack-ma-break-up-fintech-ant

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