CHINA'S top banking regulator pledged to lower the risk of companies becoming "too big to fail” in financial innovation, suggesting the nation’s biggest technology companies will face increasing scrutiny on their influence in its financial system.
"Financial innovation shouldn’t form oligopolies, reap excessive returns and harm public interests, ” Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, said at the Caixin Summit in Beijing on Saturday. Companies should not hide behind innovation to break rules of fair competition to benefit themselves, he said.
The comments reinforce the government’s tightening stance on technology companies such as Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Ant Group. Regulatory moves in the past two weeks have included new rules on online lending and regulations aimed to root out monopolistic practices, seeking to curtail the growing power of such companies.
Ant’s $35 billion initial public offering earlier this month was halted due to regulatory pressure.
While new forms of finance such as third-party payment and online lending have increased the amount of financing outside the traditional banking system, they remain within the boundaries of being financial intermediaries, Xiao said.
Although regulators encourage financial innovation which improves efficiency and increases social well-being, and have "always been supportive and tolerant” to the development of fintech, any company -- financial or technology -- that bears the final risks needs to be subject to higher requirements ranging from capital to liquidity and compliance, he said, without elaborating. - Bloomberg
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