(Yicai) May 29 -- JD.Com has completed the acquisition of Home Credit Consumer Finance, the first wholly foreign-owned consumer finance firm in China, making it the third major Chinese internet player to secure a nationwide consumer finance license.

Home Credit has changed its name to Tianjin Jingdong Consumer Finance, according to a notice that the National Financial Regulatory Administration’s Tianjin office recently posted on its website, marking the completion of its acquisition by Beijing-based JD.Com.

Two subsidiaries of JD.Com were to acquire a 65 percent stake in Home Credit for CNY3.3 billion (USD458 million), Bank of Tianjin revealed last December, when announcing its participation in the Tianjin-based firm’s restructuring.

JD.Com follows Baidu and Alibaba Group Holding in securing a nationwide consumer finance permit, filling a gap in its financial services footprint and setting the stage for a potential industry reshaping. JD.Com entered the sector in 2014 by launching internet credit product JD Baitiao, a year before Alibaba's Ant Group, but it fell behind competitors in the later development stages.

Set up in 2010, Home Credit was one of the first four consumer finance firms licensed to operate nationally in China. Initially owned by Amsterdam-based Home Credit, it then became part of PPF Group, one of Europe's top investment and financial groups. It has served over 84 million consumers in more than 300 cities in 29 provincial-level regions.

In 2019, Home Credit had total assets of CNY104.5 billion (USD14.5 billion). But with increasing market competition and tighter regulations, its financial performance has weakened since 2020. The data disclosed by Bank of Tianjin in December showed that Home Credit lost CNY3.2 billion in 2023, with a negative net asset balance of CNY2.3 billion.

The name change represents a chance for transformation and revival, an industry insider told Yicai, adding that Home Credit can now leverage JD.Com's technological and application advantages.

After becoming Jingdong Consumer Finance, Home Credit is expected to provide strong licensed support to JD Finance's loan business, said Su Xiaorui, a senior researcher at Suxi Research. Compared with the online micro‐loan license, Jingdong Consumer Finance will enjoy much higher leverage ratios and the ability to issue financial bonds, he noted.

However, Jingdong Consumer Finance inherits a series of thorny issues from Home Credit, including the disposal of non-performing assets, debt repayment pressure, and the transformation of its business model.

According to data from China Securities Depository and Clearing, Home Credit transferred non-performing assets multiple times, involving more than CNY19.8 billion (USD2.7 billion) and over 1.26 million borrowers.

Editor: Futura Costaglione