PBOC to study Alibaba’s shadow-banking activities

BEIJING — China’s central bank will study shadow-banking activities at Alibaba Group Holding, as it tries to ensure a fair environment exists for competition in the industry, said governor Zhou Xiaochuan yesterday.

Alibaba engages in activities that fall under the Financial Stability Board’s (FSB) definition of shadow banking and are subject to different capital requirements from traditional banks, said Mr Zhou. His comments were carried in a Chinese-language translation of an interview he had in English with International Monetary Fund managing director Christine Lagarde in Washington.

The People’s Bank of China’s transcript had slight variances to Mr Zhou’s comments in a video posted on the IMF website.

Alibaba applied for and was granted banking and payment licences, 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,” said Mr Zhou 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 declined to comment yesterday.

The central bank encourages the development of Internet companies, but they need to comply with existing rules when engaging in financial activities, said Mr Zhou, according to the transcript. BLOOMBERG