PBOC to Study Alibaba’s Shadow Banking Activities, Zhou Says

(Bloomberg) -- China’s central bank will study shadow banking activities at Alibaba Group Holding Ltd. as it tries to ensure a fair environment exists for competition in the industry, Governor Zhou Xiaochuan said.

Alibaba engages in activities that fall under the Financial Stability Board’s definition of shadow banking and are subject to different capital requirements than traditional banks, Zhou said in a meeting with International Monetary Fund Managing Director Christine Lagarde in Washington.

"We encourage the development of internet companies, but under the current situation they need to comply with existing rules when engaging in financial activities," Zhou said, according to a transcript on the central bank’s website.

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.

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net. To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net.