The media, citing informed sources, report that Ant Group Co. is currently exploring the possibility of selling a stake in its virtual banking division in Hong Kong.

Source: motionarray.com

This intention is a natural step in the implementation of the strategy to reorganize the activities of the fintech giant.

Bank (Hong Kong) Ltd., according to informed sources, was in talks with potential investors about the possibility of expanding operations. This information was provided on condition of anonymity because it concerns a private matter. Sources specify that this activity plan is preliminary and changes may be made to it.

The Bank is one of eight virtual lenders approved by the Monetary Authority of Hong Kong in recent years. The main competitors of financial institutions operating in the digital space are Za Bank Ltd. and WeLab Bank Ltd.

In China, the parent company of the fintech giant Ant Group has restructured operations in all areas. This was done in order to comply with the requirements of regulatory authorities after the suspension of the first public offering of the lender’s shares in 2020.

Ant Bank’s annual report indicates that at the end of 2021, the financial institution suffered losses amounting to about 232 million Hong Kong dollars (30 million US dollars). As of December of the same year, the total amount of outstanding loans was 545 thousand Hong Kong dollars (69.4 thousand US dollars). The total amount of deposits at that time was equal to 741 million Hong Kong dollars (94.4 million US dollars).

Ant Group, backed by Jack Ma, registered its wholly-owned division in August 2018 and received approval for a banking license in May 2019. In January 2023, Ma announced his readiness to cede control of Ant Group, having received about 6.2% of voting rights after a change of leadership.

The transfer of control was announced at a time when Ant Group was nearing the completion of its two-year restructuring led by regulatory authorities.

The Chinese authorities plan to impose a fine of more than 720 million US dollars on the company for violations related to the disorderly expansion of capital and financial risks. Initially, regulators set the amount of the penalty at the level of 1 billion US dollars. The fine is a painful measure, which at the same time will allow the fintech giant to pave the way for obtaining the long-awaited license of a financial holding company and will contribute to the revival of plans for a market debut.

Reducing the size of the penalty is a positive signal for the private business sector, indicating that the Chinese authorities are ready to meet halfway. For Ant Group, this decision means fewer consequences of applying a measure of influence.