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Report: Ant Financial applying for Chinese consumer finance license

Alibaba Group Holding Ltd. affiliate Ant Financial Services Group is applying to set up a consumer finance company in the southwestern Chinese city of Chongqing, the 21st Century Business Herald reported Feb. 5, citing multiple sources.

In China, it is more difficult for companies to obtain a consumer finance license than a microlending license, according to the publication. The Chinese banking regulator has so far granted only 22 consumer finance licenses, mostly to banks.

Ant Financial's two Chongqing-headquartered microlending units are already engaged in the consumer financing and lending business, generating sales of 200 billion yuan in products relating to asset-backed securities. Given China's push to deleverage the financial sector, the company may be seeking a consumer finance license in order to be able to borrow and issue debt to relieve capital pressures.

The company did not immediately respond to the publication's request for comment.

The report came after Alibaba said Feb. 1 that it will buy a 33% stake in Ant Financial, which will be the first time it will hold a direct stake in Ant Financial since it spun off the company in 2011. The transaction was announced amid market speculation that Ant Financial is preparing for an IPO.

As of Feb. 5, US$1 was equivalent to 6.29 Chinese yuan.