China regulators impose $984.1 million fine on Alibaba affiliate

On Friday, financial regulators imposed an $984.1 million fine on Ant Group, an affiliate of Alibaba Group Holding Ltd., for violations of laws about corporate governance, consumer rights and business activities.

The move ends a yearslong regulatory revamp of the financial tech firm, analysts said. The special rectification work on most of the prominent problems regarding platform companies' financial activities has been completed, the National FinancialRegulatory Administration, the China SecuritiesRegulatory Commission, and the China People's Bank of China said on their official websites.

The focus of financial regulatory authorities will shift from intensive and special rectifications of platform companies' financial businesses to normal supervision, the regulators said.

The PBOC, the central bank of Tencent Holdings, said on Friday Tenpay's fine was slapped with a fine of 2.99 billion yuan.

In response to the problems encountered in the past law enforcement inspections, the financial authorities imposed administrative penalties on the Postal Savings Bank of China, Ping An Bank and PICC Property and Casualty Company.

Ant Group said it accepts the decision by financial regulatory authorities to impose the administrative penalty and willabide sincerely with the terms of the penalty.

Ant has been conducting business rectification since 2020 under the guidance of financial regulatory authorities. The firm said it has now completed rectification work, adding it will enhance its compliance management.

Ant said it will continue to improve its R&D capabilities to better serve and create greater value for the real economy, especially for consumers and small businesses.

Pan Helin, the co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said the latest moves indicate that China's control of platform companies' financial activities will now normalize. More targeted efforts are anticipated to guide platform companies toward better compliance, promoting healthy development of the sector and better serving the real economy, he said.

Almost two years of special rectification work on the platform economy has come to an end, and the country will now encourage the standardized and healthy development of platform enterprises, Pan said.

The move may help pave the way for Ant to secure a financial holding company license, and resume its plans for an initial public offering on the stock market.

Since April 2021, Ant has been under a significant business restructuring, including converting itself into a financial holding company, whose financial activities are subject to stricter regulatory scrutiny. In late 2020, its IPO plan was halted with regulatory authorities calling for a change in the regulatory environment to ensure market fairness.

The major revamp of Ant includes disconnecting its payment app, Alipay, from sister credit products like Huabei and Jiebei, ending its monopoly on information collection, and enhancing management of liquidity risks of important fund products.

While noting Ant's rectification efforts have made achievements in meeting regulatory requirements, Wang Pengbo, a senior analyst at market consultancy Botong Analysys, said supervisory supervision is expected to become more regular.

Wang said that funding will be extended to help platform companies play a bigger role in boosting economic growth, job creation and global competition.

The regulatory environment will help stabilize market expectations and allow the financial sector to serve the real economy more effectively, Wang said.

In January, Ant announced a series of changes to the voting rights of Ant's major shareholders, saying no shareholder, alone or together with other parties, will have control over the company. The changes were part of a wider effort to enhance corporate governance.