- Internet companies must comply with rules, Governor Zhou says
- Zhou makes comments in Washington interview with IMF’s Lagarde
China’s central bank will study shadow-banking activities at Alibaba Group Holding Ltd. as it tries to ensure a fair environment exists for competition in the industry, Governor Zhou Xiaochuan said.
Alibaba engages in activities that fall under the Financial Stability Board’s 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-language translation of an interview in English he had with International Monetary Fund Managing Director Christine Lagarde in Washington.
The PBOC’s transcript had slight variances to Zhou’s comments in a video posted on the IMF website.
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 website. “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.”
Controlled by billionaire Alibaba founder Jack Ma, Zhejiang Ant Small & Micro Financial Services Group 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, with 450 million users, and controls the business that manages Yu’E Bao, the nation’s largest money-market fund. It also holds a stake in MYBank, a private online lender.
Ant Financial’s spokeswoman on Sunday 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.
— With assistance by Jun Luo