China orders Jack Ma's Ant Group to return to roots in payments services

Chinese regulators ordered Jack Ma’s online financial titan Ant Group to return to its roots as a provider of payments services, threatening to throttle growth in its most lucrative businesses of consumer loans and wealth management.

The central bank summoned Ant executives over the weekend and told them to “rectify” the company’s lending, insurance and wealth management services, the People’s Bank of China said in a statement Sunday. While it stopped short of directly asking for a breakup of the company, the central bank stressed that Ant needed to “understand the necessity of overhauling its business” and come up with a timetable as soon as possible.

The series of edicts represent a serious threat to the expansion of Ma’s online finance empire, which has grown rapidly from a PayPal-like operation into a full suite of services over the past 17 years. Before regulators intervened, Ant was poised for a public listing that would have valued it at more than $300 billion. The Hangzhou-based firm now needs to move forward with setting up a separate financial holding company to ensure it has sufficient capital, and protect personal private data, the central bank said.

Authorities also blasted Ant for sub-par corporate governance, disdain toward regulatory requirements, and engaging in regulatory arbitrage. The central bank said Ant used its dominance to exclude rivals, hurting the interests of its hundreds of millions of consumers.

China last week kicked off an investigation into alleged monopolistic practices at Ant affiliate Alibaba Group.