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Ant Group Set to Face Record $1.1 Billion Fine, Marking Milestone in Regulatory Restructuring

Ant Group, a Chinese fintech giant, is anticipated to receive a fine of a minimum of 8 billion yuan ($1.1 billion) from Chinese regulators, possibly as early as Friday. This hefty fine represents a significant development in Ant’s ongoing regulatory restructuring process, which began when its $37 billion initial public offering (IPO) was abruptly cancelled in late 2020.

This restructuring has been spearheaded by the People’s Bank of China (PBOC), who are expected to announce the fine shortly. The penalty is one of the most substantial ever imposed on a Chinese internet company and paves the way for Ant to obtain a financial holding company license. This key move will allow Ant to pursue growth and eventually revive its IPO plans.

The repercussions of this fine reach beyond Ant Group; it marks a significant point in China’s broader crackdown on private enterprises, a campaign that began with the halting of Ant’s IPO and has since significantly reduced the market value of numerous companies.

Ant Group, founded by billionaire Jack Ma, operates in various financial sectors, including payment processing, consumer lending, and insurance products distribution. Prior to the cancellation of its IPO in mid-2020, the company’s valuation exceeded $300 billion. Since April 2021, Ant has been undergoing a comprehensive business restructuring, transforming into a financial holding company. This transition brings it under regulations and capital requirements similar to those faced by banks.

Any announcement of the fine on Ant would come soon after China’s ruling Communist Party appointed central bank Deputy Governor Pan Gongsheng as the bank’s party secretary, a move two policy sources told Reuters would be a prelude to appointing him governor.

He is one of the main regulatory officials overseeing Ant’s revamp and has attended several meetings with the company about the fine and the revamp, according to the sources.

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