China’s regulator to probe Alibaba to ensure equality in financial services
The People’s Bank of China is to investigate leverage levels and capital requirements of Alibaba’s shadow banking activities, according to the transcript of an interview the country’s central bank governor had with Christine Lagarde, managing director of the IMF. Some of Alibaba’s activities that fall under the Financial Stability Board’s definition of shadow banking are subject to different capital requirements to traditional banks, and while the central bank encourages the development of internet companies, they are keen to ensure that they comply with existing rules when engaging in financial activities, according to the transcript. Alibaba affiliate, Ant Financial runs China’s biggest internet payment service, Alipay, Yu’E Bao, its largest money market fund and holds a stake in MyBank, a private online lender.

PBOC to probe Alibaba banking

STRICT: The central bank supports the formation of online companies, but they need to comply with the regulations, governor Zhou Xiaochuan said

Bloomberg





The People’s Bank of China (PBOC) will study shadow-banking activities at Alibaba Group Holding Ltd (阿里巴巴) as it tries to ensure that a fair environment exists for competition in the industry, governor Zhou Xiaochuan (周小川) said.

Alibaba engages in activities that fall under the Financial Stability Board’s (FSB) definition of shadow banking and are subject to different capital requirements than traditional banks, Zhou said.

The central bank governor’s comments were carried in a Chinese translation of an interview in English he had with IMF managing director Christine Lagarde in Washington.

An employee stands behind a glass wall with the logo of Alibaba at the company’s headquarters in Hangzhou, China, on April 23, 2014. Photo: Reuters

The PBOC’s transcript had slight variances to Zhou’s comments in a video posted on the IMF Web site.

Alibaba applied for and was granted banking and payment licenses, he said.

“But according to the definition of FSB about shadow banking ... we see some of the phenomena for the maturity transformation, or the leverage is too high, and the capital requirements are different from traditional banking,” Zhou said in the video on the IMF’s Web site.

“So you know it gives signals for many others to follow. Sooner or later I think we are going to study on this issue, to set up a more equal footing competition,” he said.

Controlled by billionaire Alibaba founder Jack Ma (馬雲), Zhejiang Ant Small and Micro Financial Services Group (螞蟻金服) has evolved from an outsider in a tightly controlled industry to an online finance giant.

The company runs China’s biggest internet payment service, Alipay (支付寶), with 450 million users, and controls the business that manages Yu’E Bao (餘額寶), the nation’s largest money-market fund. It also holds a stake in MYBank (浙江網商銀行), a private online lender.

Ant Financial’s spokeswoman yesterday declined to comment.

The central bank encourages the development of internet companies, but they need to comply with existing rules when engaging in financial activities, Zhou said, according to the transcript.