China Development Bank (CDB), one of the country's three policy
lenders, is planning to expand into financial leasing to diversify
its business as it tries to transform into a commercial bank.
The lender is ready to acquire Shenzhen Financial Leasing Co Ltd
for 7 billion yuan, taking a 90 percent stake in it, industry
sources said.
The cash injection is expected to make the new company the
largest financial leasing company in the country, according to a
report of the Shanghai Securities News.
The leasing company will be mainly engaged in aviation leasing
and leasing of large equipment and hi-tech facilities. It will also
focus on leasing of traffic, energy and telecom equipment.
Established in 1999, Shenzhen Financial Leasing Co has earned
license for financial leasing for more than nine years and has good
assets quality and leasing business system. This can help CDB
easily expand into the new area, analysts say.
Financial leasing can help improve banks' lending and
profit-earning structures and diversify their revenue sources; it
can also help enlarge banks' client bases, they say.
CDB plans to grow the leasing business into one of its major
revenue sources and scale up the capital of the leasing company to
80 billion yuan in three to five years.
Currently Hainan Airlines Group and Xi'an Aircraft Industry
(Group) Co are the two largest shareholders of the leasing company,
holding a 21.66 percent and an 18.16 percent stake in the
company.
The banking regulator issued new rules last March permitting
commercial banks to apply to set up directly controlled financial
leasing companies.
To diversify revenue sources, the financial leasing business is
becoming increasingly attractive to commercial banks. Ever since
the regulator lifted the ban on commercial banks to invest in it,
the country's leading lenders have established financial leasing
units.
In September, Industrial and Commercial Bank of China, the
country's largest bank by market value, got the green light to set
up a financial leasing company in the Binhai New Area of Tianjin,
an economic center in North China, with a registered capital of 2
billion yuan.
The same month, China Construction Bank was approved to jointly
establish a financial leasing company with Bank of America.
Bank of China entered the financial leasing business by
acquiring Singapore Aircraft Leasing Enterprise for $965 million in
2006.
(China Daily February 22, 2008)
