ANALYSIS-Stepped up Chinese scrutiny increases investment risk of ‘Beast’ Ant

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By Cheng Leng, Julie Zhu5 Min Read* Regulator sharpens focus on banks using Ant for consumer loans* Ant-related lending makes up 21% of consumer loans in banking system* At least 2 banks in August stopped sourcing new loans from Ant* Ant looking to launch $35 bln IPO, the world’s largest everBEIJING/HONG KONG, Oct 15 (Reuters) – As Ant Group was working in August towards its giant IPO, at least two smaller Chinese banks with existing ties to the fintech firm decided to stop sourcing new consumer loans from it, people with knowledge of the matter said.Their moves came after regulators scrutinised banks that used Ant’s technology platform excessively for underwriting consumer loans at a time when concerns about defaults and lenders’ asset quality grew in a pandemic-hit economy, said the people.The sharper regulatory focus over Ant’s cash cow and rapidly growing consumer lending business to curb financial sector risk has emerged as a key concern for potential investors ahead of its likely $35 billion float, the world’s largest.For its lending business, Ant originates demand from retail consumers and small businesses and passes that on to about 100 banks for underwriting, earning fees from the lenders and putting its …

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