China Ex-Minister Sees Curbing of Fintech, Bank Tie-Ups: Report

China should consider further tightening control over fintech giants by restricting the number of banks they can partner with, the Securities Times cited a former finance minister as saying.

Bad loans could rise if any platform controls too much of the market, the report cited former Finance Minister Lou Jiwei as saying in a speech at the China Wealth Management 50 Forum on Sunday. He cited the trillions of yuan of loans created by a platform he didn’t identify as an example, according to the newspaper.

Other companies could also be allowed to provide similar services under the same conditions, the Securities Times cited him as saying.

Lou said China needs to prevent a “winner-takes-all” and “too-big-to-fail” situation in fintech, according to the report. He joined a chorus of voices from the nation’s top financial regulators vowing to step up oversight over the industry’s giants. Authorities last month published draft rules overhauling the nation’s microlenders, which led to the abrupt halt to Ant Group Co.’s $35 billion initial public offering in Hong Kong and Shanghai.

China will continue to regulate its financial sector, saying that disorder poses great harm to the nation’s domestic circulation growth model, Lou said, according to the report. He said the country must adhere to solving financial disorder through deleveraging, the newspaper said.

Lou proposed that credit bonds should no longer be traded on the interbank market, which should revert to its function of providing lending, a separate report in the newspaper said.

©2020 Bloomberg L.P.

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