China tightens oversight of conglomerates’ financial operations

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

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.

Chinese authorities are plugging regulatory loopholes and stepping up their bid to maintain financial 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 financial technology giant Ant as financial holding companies, putting them under increased scrutiny because of their growing role in the nation’s money flows and financial plumbing.

Companies covered under the regulation will need at least 5 billion yuan ($731 million) in capital, the rules said.