At least 10 Chinese banks cease lending on Jack Ma’s Ant Group online platform that provides unsecured loans to over 500 million Chinese, Frank Media reports with reference to Bloomberg.

The banks are ceasing the lending due to the regulator’s requirements. The news about toughening requirements for online loans broke out last fall parallel to the preparations for and then scandalous cancelation of Ant Group’s IPO, during which the group planned to raise USD 35 billion. China’s financial authorities have called on the banks and Ant to discuss lending limits.

The authorities have presented a draft of new regulations that will concern the activity of around 200 microfinancial organizations. The regulations were designed over 2020 but have yet to come into force. In particular, they provide for introduction of new requirements for capital, and obligations for fintech platforms regarding the financing of joint loans with banks by at least a third.

The majority of loans are issued through Ant by around 100 partner banks. According to the estimates of research firm Bernstein, the introduction of joint lending requirement means that Ant will have to provide around RMB 520 billion in loans on its own. Currently, the platform processes loans in the amount of RMB 1.7 trillion (USD 263bn).

Bloomberg reports that Ant has agreed a restructuring scheme with the regulator. According to Bloomberg’s sources, the scheme implied a transfer of all Ant subdivisions – from blockchain to food delivery – to a new holding. Previously, the group suggested moving only the financial assets to the holding. The regulator will have almost the same requirements to the new structure as to banks.

“Although the restructuring will bring Ant a step closer to holding the IPO, all subdivisions of the group will face additional restrictions on capital, borrowed funds, and pricing,” commented Francis Chan, Senior Asia Financial Analyst at Bloomberg Intelligence in Hong Kong.

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