Financial Trends｜Internet financial regulatory policies are frequently released, and the industry Matthew effect may be highlighted
Since Internet financial risk rectification, powerful Internet finance companies have ended the barbaric growth of the P2P online loan business model, relying on their own operating advantages to seek transformation of financial technology, and their main businesses have gradually evolved into loan assistance, consumer finance, and wealth management businesses.
In 2020, the mutual finance industry will not only usher in the listing of the once largest online lending platform Lufax Holdings, but also the frequent introduction of financial technology-related regulatory policies.
"Regulators have formulated policies and guiding documents related to the development of financial technology companies. As a financial technology company, we believe that government regulators have recognized the value of financial technology to the financial system, such as online customer acquisition and service, big data Analysis and risk control, etc." Yan Dinggui, director and CEO of Jiayin Jinke, said in a conference call in the third quarter of 2020.
The loan assistance business has regulatory guidance, and the light capital model has become the main development direction
In the third quarter of 2020, the retail credit business of Ping An Puhui, a subsidiary of Lufax Holdings, contributed to a loan balance of 535.8 billion yuan, a year-on-year increase of 21.4%.
In addition, the loans that contributed to the scale of more than tens of billions were: 360 billion yuan of 66 billion yuan, Lexin 48.3 billion yuan, and Xinye Technology 17 billion yuan.
Yiren Jinke and Jiayin Jinke have RMB 3.2 billion and RMB 3.33 billion.
In July 2020, the China Banking and Insurance Regulatory Commission announced the "Interim Measures for the Administration of Commercial Banks' Internet Loans" (hereinafter referred to as the "Measures"), which put forward corresponding regulatory requirements for joint loans and loan assistance businesses.
In this regard, a Shanghai-based loan assistance industry practitioner previously told The Paper that the future institutional cooperation model for loan assistance, loan product models and quotas, product information disclosure requirements, big data privacy protection, and risk control requirements of all participants, etc. In terms of the final landing, in the future, in the loan assistance business, the boundaries of the rights and responsibilities of all parties will be further clarified, which is conducive to the further development of the loan assistance business in a healthier manner.
"The Measures clearly verify the business model of 360 Digital and provide detailed guiding principles for the industry." Wu Haisheng, CEO and Director of 360 Digital, pointed out in the third quarter 2020 financial report.
Lexin CEO Xiao Wenjie said that, on the whole, the "Measures" show a positive change in the attitudes of the regulatory authorities to the Internet consumer finance business. The most concerned thing is that the New Deal has pointed out the direction for the compliance of the loan assistance business, and the industry is expected to welcome it. Come benign and rapid development.
The new regulations provide a general definition of the scope of cooperation between banks and third-party institutions. All types of institutions that cooperate with commercial banks in marketing customer acquisition, joint loans, risk sharing, information technology, and overdue collection are included in the scope of cooperative institutions.
"The industry predicts that the industry's Matthew effect will be more significant while the loan assistance industry is developing rapidly and in a regulated manner." Xiao Wenjie also said.
The loan assistance business can be divided into a heavy capital model in which the platform pays a deposit to the bank and a light capital model in which only technology is exported.
The promulgation of the "Measures" has further promoted the implementation of the light capital model, because it is more in line with the requirements of the "Measures" for the development direction of financial technology platforms and banks and other funding lending models.
The financial report for the third quarter of 2020 shows that the amount of loans initiated by the light capital model within the 360 data science platform service was 16.908 billion yuan, a year-on-year increase of 48.7%.
The balance of loans in the light capital model of platform services was 21.453 billion yuan, an increase of 97.2% from September 30, 2019.
On January 26, Lexin CEO Xiao Wenjie introduced at the new strategy press conference that up to now, the "light capital mode" part of the risk-free, pure technology service model of Lexin’s new transaction volume has reached 50%. .
Adjustment of the upper limit of judicial protection of private lending interest rates
In August 2020, the Supreme People’s Court of China issued the “Regulations of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases” (hereinafter referred to as the “Regulations”), which adjusted the upper limit of judicial protection of private lending interest rates to the one-year loan market Quotation rate (LPR) is four times, and the latest four times LPR is 15.4%.
The previous upper limit was "two lines and three zones based on 24% and 36%."
A person in the loan assistance industry in Beijing believes that as a lender platform, loans are mainly generated from banks and other financial institutions, and the "Regulations" are supposedly not applicable.
There are also mutual gold companies such as Qudian in the second quarter 2020 financial report that if the relevant courts or regulatory agencies require the same interest rate caps on Qudian’s business, Qudian’s profitability may be materially and adversely affected, and net sales may be generated. Loss.
Jiayin Jinke also told The Paper previously: "The new Supreme Law private lending regulations only apply to private lending. Since Jiayin Jinke has successfully completed the transformation to institutional funds, it is expected that this regulation will affect its operations. It will be small and controllable. Jiayin Jinke is prepared for the possible chain reaction of licensed financial institutions to this regulation."
Lexin President Wu Yi told The Paper on January 26 that according to the "Regulations", the upper limit of the judicially protected interest rate is downward, and the potential pricing space may be compressed to a certain extent.
But he also pointed out that the "Regulations" are not necessarily a bad thing for the long-term industry development, because the industry can only develop healthily if it is more standardized.
According to data from Lexin’s third-quarter financial report, its platform facilitated an average nominal annualized interest rate on borrowings of 15%, which is lower than the latest judicial protection ceiling for private lending rates.
Lufax Holdings mentioned in its financial report that the overall cost of its new credit users is less than 24% (including 15.4% internal rate of return and 8.6% credit enhancement fees).
It is worth noting that on January 15th, The Paper learned from relevant authoritative channels that the Supreme People’s Court’s recent reply to the Guangdong Higher People’s Court on the scope of application of the new private lending judicial interpretation (hereinafter referred to as the "reply") showed that after soliciting Opinions of financial regulatory authorities, seven types of local financial organizations, including small loan companies, financial guarantee companies, regional equity markets, pawn shops, financial leasing companies, commercial factoring companies, and local asset management companies, regulated by local financial regulatory authorities, belong to For financial institutions established with the approval of financial regulatory authorities, disputes arising from engaging in related financial businesses shall not be subject to the new judicial interpretation of private lending.
The above-mentioned practitioners in the loan assistance industry in Shanghai said that from the point of view of that document, it is true that small loan institutions are no longer applicable to 4 times LPR. What follows depends on the enforcement of Supreme Court documents in judicial practice by local courts.
"It can only be said that entities with a small loan license can do business," he said, "but not all loan assistance businesses are done through this license entity."
Internet small loan license or "reduced to tasteless"
In November 2020, the China Banking and Insurance Regulatory Commission and the People’s Bank of China issued the “Interim Measures for the Administration of Online Microfinance Business (Draft for Comment)” (hereinafter referred to as the “Opinions”), restricting the business scope of most small online loan companies to registration In the provincial administrative region, only “very few” online small loan companies can operate across provinces after approval by the China Banking and Insurance Regulatory Commission, and the China Banking and Insurance Regulatory Commission will be directly responsible for supervision, management and risk disposal; the registered capital threshold for small online loan companies has been raised to 1 billion yuan, the registered capital of inter-provincial online small loan companies is not less than 5 billion yuan; it is required that the proportion of single capital contributions in joint loan business should not be less than 30%, which restricts online small loan companies The loan scale can be enlarged through joint loans.
Wu Haisheng, CEO and director of 360 Digital Technology, also pointed out in the third quarterly report that the "Opinions" aim to limit the leverage ratio in small loans and joint loan activities.
This new set of rules is consistent with the efforts made by regulators in recent years to reduce the leverage of the financial system and mitigate potential systemic risks. 360 Digital has marginal exposures in small loans and joint loans.
Wu Yi pointed out that in Lexin’s loan assistance model, most of the loans are not issued through the online small loan model. Therefore, the "Opinions" have little impact on Lexin.
Liu Xinyu, a lawyer at Zhong Lun Law Firm, also said: "The "Opinions" does not impose any special restrictions on the loan assistance business. The core business mentioned above must not be outsourced, and the borrower must not be guided to borrow more than other requirements. be consistent."
Chen Wen, director of the Digital Economy Research Center of the School of Finance, Southwestern University of Finance and Economics, also believes that the loan assistance business recognized by the supervision is basically a financial loan marketing and customer acquisition business, and risk control should not be undertaken by the loan assistance agency, so there is no leverage supervision and loan assistance No qualifications are required.
Zhao Zhidong, a lawyer at DeHeng Law Firm, said that after regulating the loan assistance business, it emphasized the independent risk control capabilities of microfinance companies and eliminated the operation method of "using loan assistance cooperation as a basis for real risks."
Regarding risk sharing, in current business operations, banks generally require small loan companies to provide deposits, guarantees or cover, but such small loan companies that do not have financing guarantees or insurance qualifications to provide guarantees and credit enhancement are strictly prohibited.
In addition, most Mutual Finance companies have online small loan licenses, and the introduction of the "Opinions" may greatly reduce the gold content of their online small loan licenses.
"After the introduction of the new regulations, online small loan licenses have become tasteless, and there is also a '5-year equity' requirement. For small online loans, it is tantamount to a'suppress'. The transfer and auction of the stock of online small loan licenses will If it is frozen, there will be no new additions. It is expected that subsequent market players will be more inclined to choose consumer finance licenses instead of online micro-loan licenses." said Su Xiaorui, a senior researcher at the Sacks Institute.
Consumer finance policies frequently appear
In addition to the loan assistance business, 360 Digital Technology, Lexin and Lufax have all launched consumer finance businesses, especially Lufax has also obtained a consumer finance license.
Consumer finance companies have also ushered in several policies.
In November 2020, the China Banking Regulatory Commission issued the "Notice of the General Office of the China Banking and Insurance Regulatory Commission to Promote Consumer Finance Companies and Auto Finance Companies to Enhance Sustainable Development Capabilities and Improve the Quality and Efficiency of Financial Services" (hereinafter referred to as the "Notice"), which is a consumer finance company He Auto Finance has brought three regulatory support policies: appropriately lowering the regulatory requirements for provisioning, broadening market-oriented financing channels, and increasing capital replenishment methods.
In this regard, Wu Haisheng, CEO and director of 360 Digital, believes that the "Notice" clearly stipulates the specific practices for consumer finance companies to cooperate with loan facilitation platforms.
Such regulatory changes seem to benefit platforms with strong risk management and regulatory compliance capabilities.
360 Digital saw an opportunity to expand the scope and depth of digital platform services supported by data-driven technology to achieve its long-term strategic goals.
On January 13, 2021, the China Banking and Insurance Regulatory Commission’s website issued the “Measures for the Supervision and Rating of Consumer Finance Companies (for Trial Implementation)” (hereinafter referred to as the “Measures”), which divided the results of consumer finance companies’ regulatory ratings into Level 1, Level 2 (A, B), Level 3 (A, B), Level 4 and Level 5, the rating results will be used as reference factors for consumer finance companies' market access issues.
The China Banking and Insurance Regulatory Commission stated that the issuance and implementation of the "Measures" has further improved the supervision and regulation of consumer finance companies and provided institutional support for strengthening classified supervision, which is conducive to improving the efficiency of supervision and guiding consumer finance companies to strengthen risk prevention and control, and exert their distinctive functions. Accelerate the transition to high-quality development to better serve the real economy.
"It can only be said that the entire industry still has development prospects and room, especially the prospects of licensed institutions are still good. To apply for a consumer license, in the perception of the industry, the threshold has not changed significantly. For consumption The approval of financial licenses still places great importance on the background of shareholders." Said the above-mentioned practitioners in the loan assistance industry in Shanghai.
He pointed out that if the threshold for online small loan licenses is still high in the future, more Internet or banking giants will seek consumer licenses, and more consumer organizations will approve the establishment in the future, but this also means more. People are robbing, many will be eliminated.
(This article is from The Paper. For more original information, please download the "The Paper" APP)
The Paper, News Reporter Ye Yinghe