The Ant Group was suspended from listing.As the largest IPO in human history, the listing was suspended after the subscription lottery was completed, which seemed very abrupt.On the morning of November 11, Jack Ma was interviewed by the regulatory authorities.At 11 pm on November 2, the China Banking and Insurance Regulatory Commission and the Central Bank jointly issued the "Interim Measures for the Administration of Online Small Loans (Draft for Comment)"On November 11, Ant Group was suspended from listing.
Many people think that this is related to Jack Ma's speech at the Shanghai Financial Summit on October 10 that was too casual and taboo.But in fact, Jack Ma's speech at the Financial Summit on the 24th was not random at all.Jack Ma, who is out of manuscripts all the year round and likes to play on the spot, reads the speeches at the summit completely from the manuscripts, and these manuscripts are prepared in advance, and no sentence is free to play.With Jack Ma’s IQ and EQ, it is possible to occasionally say a wrong sentence, but it must be prepared for a long discussion.Legislation is a very complicated matter. According to the legislative procedure, it must go through multiple rounds of internal discussions and solicit opinions from related industries. It takes a long time. The Interim Measures for the Management of Online Small Loan Business (Draft for Comment) will never It may be out in a few days.Jack Ma knows that the Ant Group is about to be supervised, and he is also working hard to prevent this from happening.But he failed.Because the country does not allow the ant group to leave profits to itself and losses to the people. The demands of Ant GroupLet's take a look at what Jack Ma said at the Shanghai Financial Summit.Ma Yun said:
"You cannot deny the entire Internet finance just because of p2p (explosive thunder).""(Regulatory) innovation must pay sacrifices and costs, and take responsibility for the future. To do risk-free innovation is to stifle innovation!""China's finance has no system!""(China joined) Basel is an elderly club!""Today this is forbidden, that forbidden documents are too many, and policies are too few. Today we need policy experts, not director-style document experts. We need theory from practice, not office theory practice. P2P is from office theory practice .""Chinese banks are still pawnshops, which has harmed many entrepreneurs!"
It seems reasonable, it seems sharp, it seems to be the country for the people.In fact, every sentence is fighting for the interests of the ant group, and has not considered the risks that the people need to take.
Let me tell you first, why can Ant Group get such a high profit, and why can it get a valuation of nearly 2 trillion yuan.We all know that banks make a living by lending, and much of the money they borrow is from depositors, not their own.According to the Banking Basel Agreement, bank lending must have a capital adequacy ratio requirement.The standard given by our country is around 10%, that is, the leverage of the banking industry is basically around 10 times.You have 1 yuan yourself, and you can only lend out 10 yuan at most. This is the bank.But the Ant Group circumvents this restriction.In 2013, Zhejiang Province banned all private lending, so Jack Ma went to Chongqing and opened two small loan companies.One family is called Huabai, and the other is called Bibai.The total registered capital of these two small loan companies is only 30 billion.Then, with a leverage of 1:2, it borrowed 60 billion from the bank legally and compliantly, and collected 90 billion in capital.When the Ant Group loaned out all the money in its hands, it made this large number of loan contracts into an asset package, referred to as ABS asset package, sold to others, recovered the principal, and repeated the cycle.In more than three years, Ant Group has used ABS to recycle financing more than 40 times, forming a loan scale of more than 3000 billion, while the principal is only 30 billion.In other words, the lending leverage ratio of Ant Group is as high as 100 times.
After 2018, the leverage of Ant Group has been controlled to a certain extent, but it is also very large.According to the listing financial report of Ant Group, its loan scale has now reached 1.8 trillion, but the principal is only 360 billion, and the principal rate is about 2%.In other words, the leverage ratio is as high as 50 times.I only have 1 yuan, the Ant Group can borrow 50 yuan, and the other 49 yuan can be borrowed from the bank.For this 49 yuan, the bank charges 5 to 6% of financing interest, but the interest rate for Huabei and Borrowing is as high as 14 to 18%, and the interest rate difference between them is 8 to 9%, all owned by Ant Group.Note that your profit is 49-8% of 9 yuan, but your principal is only 1 yuan.This is more profitable than grabbing money, so the Ant Group's valuation can reach 2 trillion.Why does the Ant Group get such a high profit?Some people say that through technological innovation, the Ant Group has made profits while avoiding risks.Every ABS asset package issued by Ant Group contains hundreds of thousands to millions of borrowers.Although every borrower has the possibility of default, the default loss can be covered by the interest of others, and the overall probability of default is basically zero.Therefore, this ABS asset package can be sold at an annualized interest rate of 5 to 6%.The Ant Group uses so-called big data to provide unsecured loans to people with "good credit" and charge high interest rates of 14-18%.That's why Jack Ma said that banks are pawnshop thinking. That's why Jack Ma didn't want to be bound by the Basel Accord. That's why Jack Ma said that he didn't want the regulators to stifle innovation.But in fact, this set of Ant Group is not innovation at all, but the set that the US subprime mortgage crisis has long been playing bad.China's subprime mortgage crisisPacking a large number of loans together to pack low-quality loans into high-quality loans. This so-called ABS asset package game was invented by the Americans.By selling a large number of seemingly risk-free ABS asset packages, quickly returning the funds and then lending, so as to enlarge the scale of their business to obtain a lot of profits, this set was also invented by the Americans.The combination of the two forms the subprime mortgage crisis in the United States.The so-called sub-prime loans in the United States actually have much higher creditworthiness than those of Ant Group.Ant Group only requires users to have good credit in order to lend, but US banks not only require users to have good credit and never have bad traces, but also require real estate as collateral.The so-called subprime loans are simply because the borrower's income is not enough and the risk of default is higher, but at least Bank of America still has real estate as collateral.The Ant Group's lending objects do not have enough income and there is no real estate mortgage.If the game in the United States is called subprime loans, then the game of Ant Group is subprime loans in subprime loans.In the real estate bull market for more than ten years, Bank of America has made a lot of money, and executives have paid a lot of dividends.There is no danger, nor can there be any danger.In an ABS asset package, there are tens of thousands to hundreds of thousands of mortgages. Although they are all subprime loans, only a very small number of people will default, and the comprehensive rate of return is guaranteed.Take a step back and say, isn't there still real estate as mortgage? Where is the risk?But the financial industry has always had a characteristic, that is, risks are hidden and risks are shifted back.Whether it is China's P2P thunderstorm or junk stock speculation, it has this characteristic.The flowers have been blooming for many years, hello, hello, everyone. After the thunderstorm, it will be liquidated instantly, and even the profit and the principal will be swallowed by you.In 2007, the United States began to raise interest rates and the real estate bull market ended.In an instant, the blooming subprime loan market began to thunder, and a large number of defaults occurred, which eventually formed the subprime mortgage crisis in the United States, which almost destroyed the US financial system.Until today, the United States has not escaped the quagmire of the subprime mortgage crisis.
After the subprime mortgage crisis, the United States was afraid. In order to prevent the recurrence of old things, the United States has strengthened the supervision of "innovation" in the financial industry.In response to the introduction of Basel III, the global banking industry has significantly strengthened supervision and strictly controlled the leverage ratio of banks, resulting in a general decline in the price-earnings ratio of global bank stocks.Therefore, although Ant Group makes money by lending, it has always emphasized that it is a technology company, not a bank. For this reason, it also changed the name of Ant Financial to "Ant Technology Group Co., Ltd." in the past few months.The biggest reason is that Ant Group does not want to be bound by the Basel Agreement because of its bank status.The official answer is whether Ant Group is a technology company or a financial company.Guo Wuping, director of the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission, clearly identified the Ant Group Financial Company as a financial technology company.
"Fintech companies' "Huabe", "White Tiao", "Willful Payment" and other products have no essential difference in their cores from credit cards issued by banks. They also have the functions of credit supply and installment payments. The interest and fees paid by consumers are their profits. Main sources; products such as "borrowing", "gold bars", and "micro-finance loans" are not essentially different from the small loans provided by banks."
In Director Guo's speech, he also pointed out the proportion of funds and profits of the Ant Group, which is very surprising:
"In the joint loans to individuals and small and micro enterprises, more than 90% of the funds come from the banking industry, and some are as high as 98%. Fintech companies take advantage of the advantages of guiding customers and directly charge fees accounting for the comprehensive cost of customer financing. About 1/3, plus the fees charged by agency sales or other excessive credit enhancement products, often up to 2/3."
Although the funds for lending are provided by banks, they are essentially provided by the Chinese people.When China's economy continues to rise, the default rate is low. Hello and I, everyone. Ant Group made huge profits reasonably and legally. The same was true for Bank of America before 2007.Once the economy goes down and the default rate rises, trouble will come.The principal rate of the ant is only 2%, and it will go through the warehouse directly if there is a slight disturbance.China's economy may continue to be booming for 10 years, 20 years, or even longer.But do you dare to say that eternal life will continue to rise forever, without even a slight correction or setback?This is absolutely impossible, the black swan will have it sooner or later, it is nothing more than a matter of time.On the surface, once the ABS asset package is sold, the buyer is at his own risk and has nothing to do with ants. The risk seems to be very small.The US banking industry before 2007 actually thought the same way.But in fact, the entire financial system is connected. This loss hole must be filled by someone, either an ant or someone else.Eventually, it will affect the entire banking industry. This is the so-called systemic crisis.It is not only the lending bank that is unlucky, but the owner.The subprime mortgage crisis in the United States ultimately paid for all American citizens, but the senior executives of the Bank of America had already taken a large amount of dividends to go at ease.Once the Chinese version of the subprime mortgage crisis is triggered, who will pay the bill? Set things rightAt 11 pm on November 2, the China Banking and Insurance Regulatory Commission and the Central Bank jointly issued the "Interim Measures for the Administration of Online Small Loans (Draft for Comment)"There are three main points in the opinion draft that have the greatest impact on the Ant Group.The first point is that the small loan company's own capital contribution ratio must not be less than 30% of the loans released.The second point is that small loan companies, through bank borrowings, shareholder borrowings and other non-standard financing forms, must not receive more than 1 time of their net assets.The third point is that the amount of financing through bond issuance, asset securitization (ABS), etc., must not exceed 4 times the net assets.It's circumstantial, and it sounds a bit daunting, but people in the financial world have already done it for us.According to the new regulations, the ideal upper limit of the loan scale for all small loan companies in China is 16 times, and the normal state is 12 to 13 times, but it is slightly higher than the leverage ratio of normal banks.It stands to reason that I have 1 million principals, and through various operations, I can release 16 billion loans. This is already considered a high-risk operation, and this leverage ratio is definitely fine.But the Ant Group can’t do it. Ant’s current leverage ratio has reached 50 to 60 times. It is precisely because of such a high leverage that it has achieved such a high profit.If the ant's leverage ratio must be compressed to less than 16 times, then the ant's profit will fall precipitously.Today's banking industry has a P/E ratio of no more than 10, ICBC's P/E ratio is only 6, and Ant's P/E ratio is close to 40 times.If the Ant Group is to be supervised according to the rules of the bank, then the market value of Ants will probably be cut in half.This is the reason why Jack Ma wants to spray supervision on the manuscript at the Shanghai Financial Summit, and it is also the reason why the supervision is quickly released, holding back on the eve of Ant's listing, and forcibly reducing the ant's leverage ratio.After reducing the leverage ratio to the same level as the bank, the so-called big data credit system of Ant Group is nothing more than a bank credit card system with particularly strong capabilities.The efficiency is indeed higher than that of ordinary banks, and the profitability is indeed stronger than that of ordinary banks, but it is only the strongest bank lending system, not so strong that the valuation is several times worse than that exaggerated.This is also the reason why Ant Group urgently suspended its listing.Many people who won the lottery feel that they have lost a big meat lottery and that they have gotten tens of thousands of flying. But in fact, the termination of the listing is the supervision of the retail investors who have won the lottery.If the draft of the opinion on the supervision of small loan companies is released on the eve of the listing of Ant Group, then the ant stock that you subscribed for at a high price is likely to plummet after listing and break down substantially.Cut in the middle, it's not impossible.Once the ants are cursed in accordance with the bank's rules, the ants will never create such amazing profits today.But is it wrong to limit Ant Group's lending leverage to 16 times?From any angle, there is nothing wrong. Loss cannot be left to the peopleOnce the new regulations are implemented, the valuation of ants will plummet in an instant. Jack Ma must know about this, and it will be sooner or later that ants will be supervised, and it will always have this risk.So on the eve of the implementation of the new regulations, Jack Ma has two choices.First, take the initiative to lower the IPO price of Ant Group, clarify to the public the hidden risks of ants, and take risk costs into consideration.Second, pretend to be ignorant of the hidden dangers of ants, and use other means to let the supervisory authorities open up to the ant net and let the ants continue to engage in subprime loans.Jack Ma chose the second path because he is responsible to Ant’s shareholders, and this is where the ass decides the head.But the butt of the regulators sits on the side of the people. They are responsible for the people of China, and losses must not be left to the people.Therefore, the regulation decisively introduced new regulations and stopped Ant's IPO.If there is nothing wrong with Ant's current lending game, then 7% of the loan proceeds will go to Ant.But when something goes wrong, 98% of the losses go to others.No matter who bears this loss, it must be someone else, and it will eventually be spread to all citizens. If you don't believe it, you can take a look at the example of the United States.If a company takes the same high risk as the bank, but through the so-called financial innovation, it avoids the same supervision as the bank.That is going to happen sooner or later.Back then, the subprime loan asset package in the United States was also considered foolproof, risk-free, and a brilliant financial innovation.But then something happened.The laws of finance tell us that risks will always only be transferred, but not eliminated.The ant group can only transfer risks, and absolutely cannot eliminate risks. It can hide and postpone risks at best, but sooner or later it will erupt together, leading to a systemic risk of terror.Who will transfer the risk to?Naturally, it is transferred to ordinary people with the lowest level of awareness, because they have the lowest ability to identify risks.If Ant Group is allowed to leverage such a frenzy, when it raises a large amount of capital through an IPO and expands its capital, the scale of its lending will be terrifying.At that point, once the ants explode, the consequences must be much more severe than P2P thunderstorms, which will drag the entire financial system into problems.This is why today's Ant Group, its profits and price-earnings ratio are so high that ordinary people can't understand it.Because the ants leave the profits to themselves and the losses to the people.