Jack Ma’s business empire just suffered a one-two punch as China continues to tighten the screws on its tech champions. Chinese regulators have ordered Ant Group, which owns the hugely popular Alipay app, to overhaul its operations and become a financial holding company supervised by the central bank. The announcement late on Monday came just days after Ma’s online shopping giant Alibaba was hit with a record $2.8 billion antitrust fine. Monday’s news, which had been widely anticipated, means that the Alibaba\n \n (BABA)-affiliated company will have to follow rules similar to those required of traditional Chinese banks. Ant Group’s financial activities will be highly regulated, and it will likely have to follow new rules governing how much cash it keeps in reserve and how rapidly it can grow. The overhaul marks a dramatic change from where the financial technology company stood just five months ago, when it was preparing for a record-breaking IPO. That offering was pulled by Chinese regulators days before Ant’s public debut and its fate had been uncertain ever since. Ant Group needs to face up to “serious problems” in its financial activities, said Pan Gongsheng, vice governor of the People’s Bank of China, in a statement on Monday that emphasized “the seriousness of its overhaul” and mentioned that company executives had been summoned to speak with financial regulators. The meeting was the second time since December that Ant executives had been brought in to speak with Chinese authorities. At that time, Pan said that the company — which officials accused of having “defied” regulations — would be required to overhaul its operations. Now those plans are starting to take shape. Pan said Monday that regulators have “pressed” Ant to restructure itself as a financial holding company, apparently confirming numerous media reports from earlier this year that suggested such an arrangement was on the table. While Pan’s statement didn’t include a lot of specifics on what that distinction would mean, there are already some clues as to how Ant’s operations may change. According to rules released last September, financial holding companies are required to hold “adequate capital” matching the amount of assets they have, among other measures. That likely means that the company will either have to significantly increase the amount of cash it holds, or slash the size of its consumer lending business. The company said that it will comply with the regulators’ requests. “Ant Group, in its entirety, will apply to set up a financial holding company to ensure our financial-related businesses are fully regulated,” it said in a statement. Monday’s announcement was “totally as expected,” according to Ma Xiangyun, chief banking analyst at Soochow Securities. He added in a research note that Ant will likely face “even stricter” regulations on how much capital it is required to hold compared to “ordinary financial institutions,” just like major banks in China. Ant had about 2.15 trillion yuan ($333 billion) worth of outstanding consumer and small business loans as of last June, according to its IPO prospectus. Against that huge loan book, Ant held just 16 billion yuan ($2.5 billion) in authorized capital. Beijing mandates that “systemically important” banks, or those deemed too big to fail, have enough money to cover at least 11.5% of their risk-weighted assets — a rule it adapted from a widely used international banking guideline called the Basel Accord. Ant’s balance sheet falls far short of that ratio. Pan, the central bank official, detailed other requirements for Ant’s overhaul, too, including a need to stop its “information monopoly” by collecting only the smallest amount of personal information necessary about its consumers. Ant said in its response Monday that it would “strengthen the protection of personal information and effectively prevent the abuse of data,” adding that it will apply for a license for a personal credit scoring company. Regulators are requiring Ant to overhaul its credit, insurance and wealth management services. They also want the company to sever ties between Alipay and its consumer lending services, such as Jiebei — its consumer credit loan service, and Huabei, its virtual credit card product. And they say Ant needs to reduce the size of Yu’e Bao, a wealth management product that allows users to invest money left over in their digital wallets. Ant on Monday promised that its payments businesses will “return to its origins” by focusing on serving consumers and small businesses, while it will put Jiebei and Huabei in a consumer finance unit and operate them in compliance with the law. The new rules will slow Ant’s rate of expansion, wrote Yuan Zheqi, chief banking analyst for Ping An Securities, in a Tuesday research report. Yuan pointed out that some of Ant’s businesses, including Yu’e Bao, have expanded quickly over the years. “But now they have been placed under the traditional financial regulatory system,” Yuan said. “That means they will have to follow similar compliance rules as traditional financial services. Ant Group will need to adjust its business model.” Ma, from Soochow Securities, said the restrictions on Yu’e Bao came as a surprise. He said that scaling that product down could cause Ant’s online wealth management services to take a hit.