Regulator clears banks for financial leasing after 10-year ban

The mainland banking regulator has lifted a decade-old ban and approved the setting up of finance leasing units for five lenders, offering another revenue channel for the country's fast-growing banking industry.

The China Banking Regulatory Commission did not name the lenders but it has been widely reported that they are Industrial and Commercial Bank of China, China Construction Bank Corp, Bank of Communications, China Merchants Bank and China Minsheng Banking Corp.

'We will allow more qualified banks to participate after the operations of those pilot banks,' CBRC vice-chairman Cai Esheng said in a statement yesterday.

The mainland allowed local and foreign banks to provide financial leasing in the 1980s but a ban was imposed in 1997 because of business risks and the region's financial crisis.

After the ban, six of the 12 financial leasing companies under the CBRC's supervision failed due to a liquidity crunch and the market never took off.

There are 70 other leasing companies supervised by the Ministry of Commerce, all with investments by foreign firms such as Siemens.

Revenue at all leasing companies was US$4.3 billion last year, accounting for 0.16 per cent of the country's economy, and their assets amounted to 44.2 billion yuan, Mr Cai said.