Ping An Insurance-backed Lufax, one of China’s largest financial technology companies, said on Thursday it was scaling down its peer-to-peer (P2P) lending business, but denied reports it was exiting the sector altogether. The company, also known as Shanghai Lujiazui International Financial Asset Exchange, said: “We are making three cuts in line with regulators’ requirements. The existing P2P products and customers will not be affected.” Lufax was referring to required cuts in outstanding P2P loan amounts, the number of employees involved in this sector, as well as in the number of physical outlets used to promote peer-to-peer lending. On Thursday, it denied a report by Reuters saying it was planning on exiting the sector altogether. The company, founded in 2011, had been developing P2P lending as one of its core businesses, but has shifted its focus to wealth management over the past two years. It is now one of mainland China’s largest online wealth management platforms. Lufax is the latest fintech giant to witness a shrinkage in its P2P lending business, in a fresh sign that the once-booming online financing sector has dried up in China. Lufax looks to the future of P2P lending with blockchain technology Beijing has stepped up regulation of the P2P lending sector following a string of scandals. The industry has grown by leaps and bounds since 2013, when China encouraged online companies to help reform the country's banking system. But thousands of businesses illegally raised funds before lending them to companies such as property developers. In 2015, Ezubao, one of the country's largest P2P lending platforms, was found to have illegally raised 76 billion yuan (US$11 billion) from more than 900,000 investors. In 2017, Ding Ning, its boss, was sentenced to life in prison for his role as ringleader of a Ponzi scheme. China’s Lufax plans Hong Kong IPO in April at US$60 billion valuation Beijing has over the past three years cracked down on hundreds of such platforms, forcing some to shut down for failure to repay investors because of bad loans. Last month, Xiaolei, founder of P2P platform Qbao.com, was sentenced by a court in Nanjing to 15 years in prison for his involvement in a Ponzi scheme that involved at least 50 billion yuan of investors' money. A source close to Lufax said the company was restructuring its online lending business, with plans to apply for a consumer lending licence from the China Banking and Insurance Regulatory Commission. Consumer finance supports online shoppers who purchase items such as mobile phones by offering them loans to complete these transactions. Lufax plans online platform as part of switch from P2P to wealth management The overhaul of its online lending business will also pave the way for Lufax to again seek a stock market listing after it shelved an initial public offering (IPO) plan in Hong Kong last year because of uncertainty about China’s regulation of internet finance activities, the source said. It was valued at US$39.4 billion following its last funding round, at the end of 2018, Ping An chairman Peter Ma Mingzhe said in March.