Chinese authorities are poised to impose a fine of more than $1 billion on Ant Group, the fintech affiliate of Alibaba, Reuters reported on Tuesday, citing sources with direct knowledge of the matter. Alibaba owns a roughly 33% stake in Ant Group, the company that runs the ubiquitous mobile payments app Alipay in China.
The People's Bank of China (PBOC) plans to announce the fine as soon as the second quarter of next year, said a report, adding that the regulator has been in informal communication with Ant about the fine over the past few months.
A fine on Ant could help pave the way for the company to secure a long-awaited financial holding company license, seek growth again, and eventually revive its plans for a public market debut, said Reuters.
However, citing sources, the report added that the penalty is unlikely to be finalized till China appoints a number of top officials at the State Council and other government bodies next year.
The central bank has been pushing for a restructuring of Ant after its $37 billion IPO was scuttled in 2020, and plans to have more discussions with other regulators about the revamp later this year, the sources said.
Ant has been formally undergoing a sweeping business overhaul since April last year which includes turning itself into a financial holding firm, subject to rules and capital requirements similar to those for banks.
The overhaul includes folding Ant's two lucrative micro-loan businesses into a consumer finance unit and sharing its treasure trove of data on more than 1 billion users with state firms, a move expected to curb its profitability and valuation by curtailing some of its businesses.
The company also reshuffled its management earlier this year, adding Laura Cha, former chairman of Hong Kong Exchanges and Clearing Ltd., and senior lawyer Yang Xiaolei to the board.