Ant trillion business shift

Many people in the consumer finance industry believe that the scale of “chanting” and “borrowing” belonging to small lending companies has exceeded one trillion yuan, while the leverage of consumer finance companies is about ten times, obviously, the current registered capital of Ant Consumer Finance of 8 billion yuan is difficult to undertake, the future will have to reduce leverage on the one hand, on the other hand, there is a need to replenish the capital

Ant trillion business shift

(hereinafter referred to as “Ant Consumer Finance”) was approved by Chongqing Banking and Insurance Regulatory Bureau on June 3, and its first chairman is Huang Hao.

The company’s first chairman is Huang Hao, who was born in 1974 and received a bachelor’s degree in economics with a major in international finance from Wuhan University in 1996. 29 years old was the assistant general manager of the network finance department (formerly the electronic banking department) of the Construction Bank, 31 years old was the deputy general manager of the department, and 35 years old was the general manager of the department. 2016, Huang Hao joined Ant Financial Services (Ant Group’s former name) as the vice president of Ant Financial Services Group; in December of the same year In 2019, Huang Hao stepped down as president of Netcom Bank, and later became president of the digital finance section of Ant Financial Services Group.

According to the approval document, the registered capital of Ant Financial is 8 billion yuan, and the shareholding structure is as follows: 50% owned by Ant Technology Group Co. Ltd. holds 4.99% of the shares; Jiangsu Yuyue Medical Equipment Co.

The company mainly operates the following nine businesses: issuing personal consumer loans, accepting deposits from shareholders’ domestic subsidiaries and domestic shareholders, borrowing from domestic financial institutions, issuing financial bonds with approval, domestic interbank lending, consulting and agency business related to consumer finance, agency sales of insurance products related to consumer loans, fixed income securities investment business, and other businesses approved by the CBRC.

Sun Haibo, president of the Institute of Financial Supervision, later interpreted that Ant Consumer Finance received approval for its establishment in September last year, and the opening approval was slightly late because of the tightening of Internet finance regulation, but the approval was granted in early June, which basically means that the rectification of the credit sector of Ant Group is completely clear.

The relevant person in charge of the non-banking department of the China Banking Regulatory Commission said that after the opening of Ant Consumer Finance Company, it will orderly undertake the consumer credit business of the two small lending companies that meet the regulatory requirements in accordance with the Ant Group’s consumer credit business rectification program. During the one-year transition period from the opening of Ant Consumer Finance, the two small lenders will achieve a smooth and orderly market exit. During the transition period, Ant Group will also properly handle the surviving asset-backed securities (ABS) of the microfinance companies in accordance with regulatory requirements to maintain the stability of the financial market.

How will Ant Consumer Finance take over the consumer credit business of Ant Group’s microfinance companies in the future? Many people in the consumer finance industry told Caijing that the scale of “chanting” and “borrowing” has exceeded one trillion yuan, and the leverage of consumer finance companies is about ten times, so it is obvious that the current registered capital of Ant Consumer Finance of 8 billion yuan is difficult to undertake. In the future, on the one hand, we need to reduce leverage, and on the other hand, we need to replenish capital.

Dong Ximiao, chief researcher of Zhongguancun Internet Finance Research Institute, pointed out that the registered capital of Ant Consumer remains at 8 billion yuan, which is lower than expected. Even according to 12 times the leverage, the most to undertake small loans business but 100 billion yuan. It is expected to accelerate the subsequent capital replenishment. The regulator approved the opening of the company and requested that “chanting” and “borrowing” can only be used for self-operated business. Then the joint loan actually funded by small and medium-sized banks, 98% can not hold the leg. “Through ABS (which is strictly controlled) and joint loans (with a contribution ratio of no less than 30%), it is still possible to increase the size of the undertaking, but there is not much room.”

Sun Haibo similarly pointed out that consumer finance companies strictly refer to the framework of commercial banks to enforce capital adequacy, roughly ten times the leverage; the current registered capital should be far from adequate, and the probability is that a capital injection will be required by the end of the year. The total size of the ant small loan chanting and debit is still more than 1.5 trillion yuan (the vast majority of which is funded by financial institutions), but after the rectification, the ant consumer finance company to contribute at least 30% about 500 billion yuan, in accordance with the requirements of the capital adequacy ratio, the net capital of the consumer finance company at least 50 billion – 60 billion yuan. “The process of capital increase and expansion of the current second largest shareholder and the third largest shareholder, etc. may be diluted, Ant Consumer Finance Company’s overall future business scale and development prospects are good for everyone, so the introduction of new entrants to major shareholders is a probable event.”

According to the rectification plan, Ant Group should complete the brand rectification work of “Chanting” and “Debit” within six months of Ant Consumer Finance’s opening. After the completion of the rectification, “Flower Chant” and “Debit Chant” will become the exclusive consumer credit products of Ant Consumer Finance, and consumer credit issued by other financial institutions with the help of data information provided by Ant Group will no longer be labeled as “Flower Chant” and “Debit Chant”. “In 2015, the Ant Group launched a new consumer credit product called “Chanting”.
In 2015, the Ant Group launched two consumer finance products, “Flower Chant” and “Debit Chant”, after the Caijing reporter reported that according to the Ant Group’s prospectus, in the first half of 2020, the Ant Group’s micro-credit technology platform contributed to a total credit balance of According to Ant Group’s prospectus, in the first half of 2020, Ant Group’s microfinance technology platform contributed to a total credit balance of 2.15 trillion yuan. Among them, the balance of consumer credit represented by “chanting” and “borrowing” (the main body is Chongqing Ant Small Micro Microfinance Co. It is worth noting that of the credit balance facilitated by the Microfinance Technology platform, the proportion of actual lending by financial institutions or asset securitization has been achieved is approximately 98% in aggregate.

On November 2, 2020, the Ant Group, which was scheduled to be listed on the Science and Technology Board, was suddenly hit by a change in regulatory policy on the eve of its listing, with the official WeChat of the CBRC releasing “Interim Measures for the Management of Network Microfinance Business (Draft for Comments)” for public comment (hereinafter referred to as “Interim Measures for Network Microfinance”), a document regulating the tightening of the microfinance business, which is one of the main businesses of the Ant Group.

Will the approval of the opening of Ant Consumer Finance have an impact on the existing consumer finance market? A senior executive from a consumer finance company in northern China told Caijing that Ant Consumer Finance will take over “chanting” and “borrowing”, but the main body of the company has changed, and the customer base behind it has not changed, so it will not be affected. The company’s customer base and business model are not exactly the same, so its own positioning determines the distribution of the market.

“It is a benefit for the partner financial institutions. In the previous cooperation, it was impossible for any financial institution to display its name alone, and in the future, it can highlight its own brand.” A senior executive of a consumer finance company said to Caijing.

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