China Tells Alipay Operator Ant Group To Separate app Lending Business

Beijing is angling to break up the super-app Alipay in order to make a new app for the company’s 1 billion-plus-user loans business, a Financial Times report stated.

This would make the most visible restructuring yet for the giant as China aims to crack down on monopolistic tech behavior.

Previously, Chinese regulators have ordered Ant to separate the back end of its lending businesses, Huabei and Jiebei. Huabei is similar to a traditional credit card while Jiebei works on small unsecured loans.

Officials want those apps, which have already been split off from Alipay’s regular financial offerings, to be split into an independent app. The plan would also have Ant turn over the user data underpinning its lending decisions to a credit-scoring joint venture, which will be partially state-owned. Ant has been struggling to control the new joint venture with regulators, and a compromise was reached in June that sees the state-owned companies in the home province, including the Zhejiang Tourism Investment Group, holding a majority stake.

The move could have the effect of dampening Ant’s lending business, which had seen considerable growth of both Huabei and Jiebei powering its plans for an IPO last year, which didn’t end up happening.

According to PYMNTS, the new venture will also be applying for a consumer credit scoring license, which Ant has long wanted. The Chinese central bank has not been generous with the licenses, and all of the ones it’s issued have gone to state-run operations. That has stopped Ant from monetizing the data that it has collected on Chinese citizens.

The plan being considered would see Ant losing its ability to independently assess how worthy of credit borrowers are. Future users might see their requests funneled to a joint venture credit scoring company where the credit profile is held, and then sent to the Huabei and Jiebei lending app to issue the credit.

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