Jack Ma's blunt words against the Chinese banking System has landed him into trouble once again. He was speaking at a high-profile financial forum in Shanghai. In the speech, he labeled the global banking Basel Accords as an "old people club." He also said that China's biggest risk is that it lacks a financial ecosystem, and Chinese banks are like "Pawn Shops," where collateral and guarantees are the hard currencies. As a result, some decide to go so big that they are not allowed to fail.
He quoted the famous Chinese saying to highlight the issue with the banking system, "As the Chinese like to say, if you borrow 100,000 yuan from the bank, you are a bit scared; if you borrow a million yuan, both you and the bank are a little nervous; but if you take a 1 billion yuan loan, you are not scared at all, the bank is."
This had irked many of Beijing's top financial watchdogs. Beijing also issued draft rules on online microlending, demanding stricter capital requirements and operational regulations for some of Ant Group Co.'s consumer credit businesses. Later in a shocking move, the Shanghai Stock Exchange suspended Ant's listing on its Star board, citing Monday's meeting and subsequent regulatory changes, and suspending its Hong Kong IPO as well. The fintech giant was scheduled to start trading on Thursday. The news sparked a slide in Alibaba shares on Tuesday in New York while dragging down other Chinese companies' U.S.-listed stocks.
It is still not very clear if jack Ma's words were too sensational, or the watchdogs are afraid of the Ant Group growing too big and profitable. Ant is raising at least $34.5 billion in an IPO.
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