Exclusive: Ping An-backed Lufax joined the P2P lending to be in the middle of the regulatory woes – sources

BEIJING/SHANGHAI (Reuters) – Lufax, is one of China’s largest online wealth management platforms that are supported by the financial giant Ping An Insurance (601318.SS), and the plans for the exit at once, a core of peer-to-peer lending (P2P), business, three sources with direct knowledge of the matter told Reuters.

FILE PHOTO: A sign of the wealth management platform Lufax, is seen during an exhibition in Beijing, China, December 11, 2015. Photos, December 11, 2015. REUTERS/Stringer/File Photo

The move by Lufax has to leave the P2P technology, in which companies collect funds from private investors and lend the money to small businesses and individual borrowers, is the result of regulatory constraints, two of the sources said, and is in the midst of China’s approach to the business, to include a broader financial risks.

The sources said they did not know exactly when the Lufax P2P business-to-business should be closed, and how the outstanding issues will be dealt with, but added that the company has already started the process of applying for a license in the consumer finance, which is one of the activities in which they intend to focus on.

An emergency landing on the water, from the P2P company, with a focus on consumer finance that can smoothen the path for Lufax in order to seek a stock market listing. The start-up of a postponed as Hong Kong’s float is scheduled for the first half of 2018 and in the midst of the uncertainty about China ‘ s consumer lending regulation, the sources said.

Formally known as the Shanghai’s Lujiazui International Financial Asset Exchange, which Lufax, it was established in 2011, as well as a P2P platform Ping An (2318.HK).

The P2P technology has risen enormously in China is still much higher than in the rest of the world combined, P2P, credit – to-the supervisors took a period of three years, as claims of fraud emerged, and as part of a larger Beijing-against the possible bubbles in the financial system.

Lufax’s move to ditch its P2P-based company is the difficulty to comply with the requirements of as 2016, with P2P lenders to register with the local authorities, as well as two of the sources said.

She said that the financial regulators including the China Banking Insurance Regulatory Commission (CBIRC), said Lufax, that it would be difficult for the company to register as a P2P lender to work with the local authorities in the near future.

Lufax P2P staff will be housed in a new division focused on consumer finance, the source said.

Ping An declined to comment. Lufax and CBIRC not immediately respond to requests for comment.

The sources declined to be identified because they were not authorized to speak publicly.

Lufax is the new consumer finance is the focus it brings to the company and the group’s banking unit, Ping An Bank (000001.The SS, as well as the hub, the source said.

The Consumer finance business of lending for the purchase of products, such as mobile phones, electronic goods and household appliances and other devices – is growing rapidly in China, with 24 companies that have a license at this time, according to data from CBIRC.

Lufax has diversified into wealth management products, although such products are under the control, it decreased by 20% 369.41 billion yuan ($53.72 billion) by 2018, with new rules, in the case of the leveraged investments which were introduced, following the Ping of An annual report.

The outstanding balance of loans on the balance sheet of Lufax reached 375 billion yuan by the end of 2018, an increase of 30% from the previous year.

In December, Lufax increased to $1.33 billion in a funding round from about a dozen investors, which is valued at $38 billion, and prior to the closing.

Reporting by Cheng Leng in BEIJING and Engen Tham in SHANGHAI; Editing by Jennifer Hughes and Muralikumar Anantharaman

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