China Restricts Micro-Loans; Alibaba’s Ant Financial Halts Asset-Backed Securities Lending

Following China’s decision to restrict micro-loans, Alibaba’s Ant Financial has reportedly halted its consume loan lending. According to Bloomberg, the company has not sold any asset-backed securities since early December, which was around the time that Chinese officials announced they were requiring micro-lenders to consolidate ABS into their balance sheets. In response, Ant Finance sent out an email explaining that it stopped issuing ABS as interest rates in the interbank market had gone up significantly. 

Yang Junmin, an analyst at Internet finance research at Shanghai Yingxun Technology, revealed his predictions to the media outlet by stating:

“Without the new rules, Ant Financial’s consumer loans would balloon with no limit because it can move most loans off its balance sheet by packaging them into ABS. Now they would be very cautious about selling new ABS. Ant Financial’s new consumer loans may have an obvious slowdown this year.”

Jack Ma, Founder of Alibaba, also shared:

“There are so many companies that claim they are Internet financing companies so they might have some rules and laws to clean all the stuff. But I don’t see anything that’s for us yet honestly.”

The news that Ant Financial’s halt on ABS loann comes just after the company was blocked by the U.S. government on acquiring MoneyGram, which announced its intent to purchase in 2016. As previously reported, the acquisition would have combined MoneyGram’s money transfer network of 2.4 billion bank nd mobile accounts with Alibaba’s fintech global presence. MoneyGram CEO Alex Holme commented on Treasury’s decision:

“Despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS will not approve this merger. While we are disappointed by this outcome, we are confident in the future of MoneyGram and are excited about the benefits of our future cooperation with Ant Financial. By increasing access to digitally enabled customer wallets on the receiving side, we will be able to reduce distribution costs and improve transaction processing time. Together with Ant Financial, we hope to be the preferred money transfer option globally, and we look forward to bringing the considerable benefits of this collaboration to all of our stakeholders, including stockholders, customers, agents and employees.”

Doug Feagin, President of Ant Financial International, added:

“We remain excited and encouraged about Ant Financial’s future prospects around the world as we continue to establish new partnerships and pursue opportunities that bring innovative services to our ecosystem. Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem and, while Ant Financial won’t have a direct ownership relationship with MoneyGram, we look forward to working closely with the MoneyGram team to make our platform even more accessible – particularly to unbanked and underserved communities globally – and create even better experiences for our customers.”

 

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