Lufax, Backed by Ping An, Exits P2P Lending on Regulatory Crackdown
Online wealth management platform Lufax, backed by financial giant Ping An Insurance, plans to discontinue its peer-to-peer lending business and apply for a consumer finance license.
Shanghai Lujiazui International Financial Asset Exchange Co., known in short as Lufax, seeks to launch a consumer finance business and transfer its P2P employees to the new department, according to various media. The reason for the transition, as reported by Reuters, was in the regulatory crackdown in China's online lending industry.
The online lending market in China has suffered from tighter measures implemented by Beijing over the past year. According to data released by wdzj.com, the loan balance in the country's P2P online lending industry dropped to 687 billion yuan ($100 billion) as of June, an additional 2 percent decline from May. Lufax, an associate of China Ping An Group, ranked first in the online lending industry with a loan balance of about 100 billion yuan ($14.5 billion), with an estimated average annual return of 8 percent.
“The P2P business is actively responding to the ‘three downs’ requirements from the regulator,” a Lufax representative said on Sina.
“Three downs” refers to the number of institutions, loan balance and borrowers that China plans to diminish according to its 2018 plan.
“The online loan business is operating normally, and the stock products and customer rights will not be affected,” the Lufax representative stated.
The date when the P2P business of Lufax will be discontinued has not been announced.