Banking News
- Five banks allowed to start leasing business
Date: 15-Jun-2007 Sources: (Shenzhen Daily)
THE government has given the go-ahead for five commercial banks to branch into leasing to energize the sector and create new profit streams for lenders, the banking regulator said Thursday.
The five have won approval from the State Council and the China Banking Regulatory Commission (CBRC) is now conducting further checks, CBRC Vice Chairman Cai Esheng said.
He did not name the banks, but China Construction Bank and China Minsheng Bank Corp. have said they have applied for a leasing license.
ABN AMRO said last November it was also entering the sector to tap a growing need for asset-backed finance to fund spending on capital equipment.
The government said in February that it would let foreign and domestic banks establish leasing companies, seven years after it stopped issuing financial leasing licenses to clean up the industry.
In a statement posted on the agency's Web site, Cai said his office would allow more banks to enter the sector as market demand grew.
Cai said the industry had huge potential, given the importance of investment for China's growth. Leasing volume in 2005 was just US$4.25 billion, tiny for a US$2.75 trillion economy. Ranked by market size, China came 23rd in the world in 2005, he said.
At the end of 2006, China had 12 financial leasing firms with combined assets of 14.2 billion yuan (US$1.86 billion). However, only six of the firms were operational. They made a profit last year of 130 million yuan, Cai said.
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