Tencent, the Chinese tech giant, is looking into whether regulators will required it to have a financial holding company for its FinTech business, CNBC wrote Wednesday (March 23).
This comes after a Bloomberg report that Chinese authorities are considering making Tencent create a financial holding company for WeChat Pay, its mobile pay service.
Bloomberg wrote that Tencent needs to spin off its banking, securities, insurance and credit-scoring services into a financial holding company. This would let it all be regulated like a normal bank. And it would be in line with the Peoples’ Bank of China’s goal of regulating tech companies’ abilities to operate bank-like services.
Tencent President Martin Lau said the company has “been continuously exploring the establishment of the financial holding company and looking at the regulation with respect to that and whether there is a requirement for that.”
He also added that, recently, there had been two financial holding company licenses issued, so the company felt that it “should have a clearer picture on what are the criteria for inclusion into financial holding company and whether we qualify or not.”
In late 2020, regulators suspended the public listing of Ant Group, which would have been the biggest public listing in the world. The PBOC asked Ant Group to restructure as a financial holding company.
See also: China Could Require Tencent’s WeChat to Secure New Payment License
PYMNTS wrote earlier in March that Chinese regulators might force Tencent to spin off WeChat Pay into a new payments subsidiary.
The decision comes in the wake of China’s stricter rules on tech companies.
Regulators might make Tencent split off its various components into new companies separate from the social media company.
According to PYMNTS, WeChat Pay handles billions of dollars a day – though it’s a transactional platform and doesn’t extend loans. By removing the payments capability, it would have less super app functions and less convenience.
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