China Tightens Rules for Conglomerates’ Financial Businesses

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(Bloomberg) — China is tightening rules and imposing capital demands on sprawling empires such as Ant Group and China Evergrande Group in its latest attempt to curb risks in the nation’s $49 trillion financial industry.The new regulations will require licenses for non-financial companies that do business across at least two financial sectors, and which are designated as “financial holding companies,” the State Council said Sunday on its website.The rules will take effect Nov. 1 and apply to companies with a banking operation and financial assets of more than 500 billion yuan ($73.1 billion), or those without banking operations but have financial assets exceeding 100 billion yuan.Companies that meet the criteria but are denied regulatory approval to set up financial holding entities must sell their stakes in the financial companies or give up control, according to the rules.Chinese authorities are plugging regulatory loopholes and stepping up their bid to maintain stability as the Covid-19 pandemic pummels economic growth and bad loans pile up. In 2018, the central bank identified Evergrande, HNA Group Co., Fosun International Ltd., Tomorrow Group as well as billionaire Jack Ma’s Ant as financial holding companies, putting them under increased scrutiny because of their growing role in the …

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