China’s online lender Lufax recalibrates business model as regulators clamp down on Big Tech lending



a person holding a sign: Lufax ADRs have had a bumpy ride since the fintech giant listed in October as investors digest fast-evolving fintech regulation in China. Photo: Reuters


Lufax ADRs have had a bumpy ride since the fintech giant listed in October as investors digest fast-evolving fintech regulation in China. Photo: Reuters

Lufax Holding is overhauling the way it digitally matches borrowers and lenders as China clamps down on Big Tech companies extending credit in the world’s second-largest economy amid fears the platforms could be a source of financial instability.

The Shanghai-based firm is lowering interest rates on loans; raising the capital contribution that it makes to loans; and has checked it does not bundle services for customers. Lufax is also widening the array of banks that it works with on lending and is verifying that its disclosure to borrowers is fully compliant with fast-evolving rules.

Lufax, backed by China’s biggest insurer Ping An Insurance (Group), is one of the first major financial-technology companies to lay out how it will adjust in the light of tighter and more complex regulation governing the provision of credit to individuals and small businesses. It is the largest publicly traded online lender in China, following a US$2.4 billion stock sale in October in New York.

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“As planned, we also continued to make progress in establishing a more sustainable risk-sharing business model with our funding partners,” said Lufax CEO Gregory Gibb during the company’s third-quarter earnings call on Wednesday.



a man wearing a suit and tie: Lufax CEO Greg Gibb sees more fintech guidance as soon as in the coming weeks. Photo: Handout


© Provided by South China Morning Post
Lufax CEO Greg Gibb sees more fintech guidance as soon as in the coming weeks. Photo: Handout

Alarmed by spiralling online consumer debt this year, China is clamping down on the fast-growing microlending industry, calling it a threat to social harmony and financial stability.

Beijing-based regulators published a set of draft rules on November 2 capping loans by the country’s 7,227 microlenders to individuals and small businesses. In a one-two punch, regulators followed up with anti-monopoly laws on November 10, targeting bundled sales by Big Tech platforms and excessive price discrimination.

“The real purpose here is for platforms that are cooperating with banks to have more skin in the game, bear more risk and have sufficient capital to back up that risk,” said Gibb. He added what the exact bearing the microfinance rules would have on Lufax’s business model remains unclear.

Gibb said he expects more guidance from regulators as soon as the next couple of weeks. He said there is likely to be more clarity on what prices banks can offer borrowers over digital platforms as well as what types of banks can continue to increase their deposits with online platforms with which they co-lend.

Should more regulatory changes be introduced, Lufax executives said they were ready to make sure the firm remained compliant.

“The market probably won’t grow as fast as it has in the past given these changes,” said Gibb, so Lufax is looking to widen its cooperation with more bank and asset management companies.

Lufax American depositary receipts (ADRs) have risen to US$16.80 on December

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Congolese Model Challenges China’s Love For ‘Tall, Light And Skinny’

As a young black woman modelling in Hong Kong, Harmony Anne-Marie Ilunga rarely saw anyone who looked like her in the magazines. Now the 22-year-old is trying to change that, one model at a time.

While the Black Lives Matter movement fuels debate and change in the fashion worlds of the United States and parts of Europe, industry figures say Asia’s beauty and body expectations remain dominated by an ideal that is pale, thin, and unrepresentative of the region.

As a young black woman modelling in Hong Kong, Harmony "Anne-Marie" Ilunga rarely saw anyone who looked like her in the magazines. Now the 22-year-old is trying to change that, one model at a time. As a young black woman modelling in Hong Kong, Harmony “Anne-Marie” Ilunga rarely saw anyone who looked like her in the magazines. Now the 22-year-old is trying to change that, one model at a time. Photo: AFPTV / Matthieu VERRIER

“I would walk into an agency and they told me that they prefer white models to black models,” Ilunga, who moved to Hong Kong as a child refugee from the Democratic Republic of Congo, told AFP.

“I remember just being shattered. I was 17, it just broke my heart.”

Again and again, she saw that models in the wealthy global finance hub — home to roughly 600,000 people of non-Chinese descent — were expected to be “tall, light, and skinny”.

Harmony Anne-Marie Ilunga opened a small agency in Hong Kong to champion models of all skin tones and sizes Harmony Anne-Marie Ilunga opened a small agency in Hong Kong to champion models of all skin tones and sizes Photo: AFP / Anthony WALLACE

The same was true of the massive fashion market in mainland China.

“I started lightening my skin, using lightening products… Just so that I could fit into society’s norms,” Ilunga explained.

While the Black Lives Matter movement fuels debate in the fashion world in the West, Asia's expectations are dominated by an ideal for pale and thin bodies While the Black Lives Matter movement fuels debate in the fashion world in the West, Asia’s expectations are dominated by an ideal for pale and thin bodies Photo: AFP / Anthony WALLACE

After rounds of rejections, in 2018 she opened her own small agency to champion models of all skin tones and sizes.

“Representation matters so much,” she said, adding she believes fashion is an accessible way to change minds — and prevent other young women from feeling they have to change.

Harmony Anne-Marie Ilunga says there is still resistance to black women in Hong Kong's modelling industry Harmony Anne-Marie Ilunga says there is still resistance to black women in Hong Kong’s modelling industry Photo: AFP / Peter PARKS

Ilunga’s agency now has 32 male and female models on its books from places such as Rwanda, Burundi, Pakistan, India, Sri Lanka, Nepal and the Philippines.

Harmony Anne-Marie Ilunga (L) moved to Hong Kong as a child refugee from the Democratic Republic of Congo Harmony Anne-Marie Ilunga (L) moved to Hong Kong as a child refugee from the Democratic Republic of Congo Photo: AFP / Anthony WALLACE

They have enjoyed some successes — though she admits changing attitudes is hard.

One of her most booked models, she said, is an 18-year-old Burundian.

“Most are not local brands, but they are brands that are trying to promote internationally — that’s the thing,” she said of the kind of clients willing to look beyond white or Asian models.

Asia's beauty and body expectations remain dominated by an ideal that is pale, thin, and unrepresentative of the region Asia’s beauty and body expectations remain dominated by an ideal that is pale, thin, and unrepresentative of the region Photo: AFP / Anthony WALLACE

Ilunga said she has found male black models are more sought

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