After the Chinese authorities have strengthened the pressure on the Ant Group, the Alibaba FINTEX-Division Jack Ma, the former Customers of the Alipay payment system (enters the Ant Group) began massively to go to its competitors. This can cause a wave of non-payment on existing loans, writes Financial Times.
Alipay is the largest Chinese payment system. More than 500 million clients were issued through it loans from June 2019 to June 2020. The volume of outstanding loans issued by Ant Group, by the middle of last year reached 2.2 trillion yuan.
Six lending online platforms reported ft, which experienced a surge of activity after the cancellation of an IPO Ant Group. The manager from Jiedai Dawang told the newspaper that they had a third loan application for a third. According to him, at the same time the Ant Group has reduced loan operations.
Rates on loans for competitors Ant Group make up 25-35%, while Jack Ma - 18% has, notes ft. Ant was mostly an intermediary between banks and borrowers and loans outreach not from their own funds, but used algorithms to reduce customers with their partner banks. At competitors Ant simpler management systems and risk identification systems, which is why they are forced to set larger loan rates.
On such conditions, the borrowers will more often violate loan obligations, which is confident economist Bo Zhuang from the Consulting Company TS Lombard. "Credit risks in consumer lending increased after the coronavirus pandemic," said FT Chief Economist Bank Hang Seng in Hong Kong Dan Wong. - The problem is particularly acute with young and low-income borrowers. "
In November, Ant Group planned to hold the largest in IPO history. However, China's authorities prevented the company to enter the stock exchange and began an antitrust investigation into Alibaba. For several months, the top managers of Ant Group and Chinese regulators are negotiating the further fate of the company. Bloomberg with reference to the sources wrote that they agreed to create a separate holding company, which will manage divisions requiring licenses for financial activities.