Bank of Communications today set up a two-billion-yuan (US$273
million) leasing unit in Shanghai.
BoCom Financial Leasing Ltd is the second leasing firm in China
wholly owned by a domestic bank.
The leasing firm will offer financial leasing to industries
including aviation, shipping, manufacturing and infrastructure.
"The financial leasing unit is a key step in BoCom's aim to
build itself into a comprehensive financial holding company," the
bank said in a statement yesterday. "The initial structure as a
financial holding company is completed with the set-up of the
leasing unit."
The Shanghai-based bank has set up units in leasing, fund
managing, trust, insurance and investment banking business besides
its traditional lending business.
China lowered the capital requirement for domestic financial
leasing firms from 500 million yuan to 100 million yuan in
February, seeking to nurture them in an industry that foreign
investors dominate.
Chinese banks were forced to quit the business in 1997 amid the
Asian financial crisis.
Expansion into leasing will help make banks more competitive and
enlarge their client base, the banking regulator said.
Industrial and Commercial Bank of China opened its wholly owned
financial leasing company in November as the first bank to wholly
own a leasing unit.
China Minsheng Banking Corp has also won approval to step into
the market in the form of a joint venture, the Beijing-based bank
said in October.
The financial leasing industry has been in China for two decades
but is yet to take off.
The country had 12 financial leasing firms at the end of 2006
with a combined net profit of 130 million yuan. The total face
assets topped 14.2 billion yuan with debts of 11.2 billion
yuan.
China opened its financial leasing industry to global
competitors as part of its agreement to join the World Trade
Organization in 2001.
Financial leasing firms can undertake yuan and foreign currency
denominated leasing operations, including offering term
deposits.
(Shanghai Daily December 28, 2007)
