Ant Group hit with $985M fine by China’s central bank (update) – report
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Michael Loccisano
Update: The story has been updated with the fine amount announced by the People’s Bank of China.
China’s central bank has imposed a RMB 7.12B fine ($985M) fine on the Ant Group, CNBC reported.
The People’s Bank of China (PBOC) said the fine was in response to violations of several laws and regulations, including those linked to corporate governance, consumer protection and anti-money laundering requirements, according to the CNBC report.
Earlier today, a Reuters report noted that Ant Group is likely to face a fine of at least RMB 8B (~$1.1B), marking an end to the company’s regulator-driven revamp.
The PBOC had been steering the revamp at Ant — a finance affiliate of Alibaba (NYSE:BABA) (OTCPK:BABAF) — after its potential $37B IPO was cut short in 2020. The fine could be disclosed in the coming days, even as soon as Friday.
The fine would help pave the way for Ant to secure a financial holding company license, seek growth, and eventually, revitalize its plans for an IPO, the report added.
Since April 2021, Ant has been carrying out a restructuring process which includes transforming itself into a financial holding company that would make it face same rules and capital requirements similar to those for banks, the report noted.
The penalty would likely focus on Ant’s alleged violations linked to a “disorderly expansion of capital” and the related financial risks its businesses potentially caused, the report noted citing one of the persons.
The fine would be the largest regulatory penalty on a Chinese internet company since ride-hailing company Didi Global (OTCPK:DIDIY) was penalized $1.2B by China’s cybersecurity regulator last year.
Alibaba was fined a record RMB 18B in 2021 for antitrust violations.
For the broader technology industry, a fine on Ant is likely to be a key step towards the end of China’s crackdown on private enterprises which started with cutting off Ant’s IPO, according to the report.
Alibaba (BABA) shares were up 2.72% to $86.12 in pre-market trading on Friday.