Are new People’s Bank of China rules an anti-Ant thing?
The move by China’s central bank to tighten the regulatory screws on non-financial firms that own financial assets is long overdue. That it happened in the run-up to the blockbuster IPO of Ant Group – the ever-growing digital and financial firm – is certainly curious.
Can it be entirely coincidence that China’s central bank has chosen this moment – in the run-up to Ant Group’s should-be-record-breaking IPO – to force the country’s non-financial firms to register as financial holding companies?
The timing is certainly auspicious, or suspicious – or both.
New rules, set out in a briefing on Monday by People’s Bank of China (PBoC) deputy governor Pan Gongsheng, and backed by the State Council, China’s cabinet, are simple enough.
From November 1, any non-financial Chinese firm that owns two or more financial institutions must have at least Rmb5 billion ($739 million) in registered capital. Only then can it qualify as a licensed financial holding company.
[They got] away with all kinds of related transactions that created all manner of corporate governance issues
The PBoC also turned the screw the other way, informing any non-financial firm that owns a commercial bank with assets of more than Rmb500 billion, that it too must register as a financial holding company.
Pan’s words didn’t require much parsing. He groused that non-banks that had “expanded blindly, causing risks to mount” – but declined the opportunity to take responsibility for letting that happen.