Beijing yesterday ordered the closure of a financial leasing company amid a crackdown on the troubled non-bank financial institutions. The move is the latest by the central bank, the People's Bank of China (PBOC), to clean up the sectors deemed to be the weakest link in and, greatest threat to, the financial system. The scandal-ridden trust sector is a focus of the action. In the Financial News yesterday, the PBOC said it revoked China Huayang Financial Leasing's licences to conduct financial and foreign exchange for 'serious violations' and an 'inability to pay its debt'. Huayang's financial operation was ordered to cease from yesterday. The PBOC said it aimed to 'restore financial order' and 'protect the legal rights of creditors'. The Bank of Communications was appointed to set up a body to liquidate the leasing company. Details of Huayang's debt level and creditor particulars were not revealed. The central bank said Huayang's individual creditors would be repaid in full for their principal and interest upon confirmation by the liquidation body. Set up in 1988, Huayang was a small financial leasing firm with branches in Nanjing, Chengdu and Kunming, said a Bank of Communications official. Subsidiaries of Huayang would be permitted to continue normal operations during the liquidation period, the central bank said. Last month, two trust firms and a leasing company in Hubei's provincial city of Wuhan were closed. On Wednesday, mainland-backed Wen Wei Po said Beijing would retain only three of its 14 state-level trust and investment companies. Beijing ordered the closure of Guangdong International Trust and Investment Corp (Gitic), the flagship financing arm of Guangdong province, in October 1998 for its failure to repay US$4.7 billion in liabilities. While the trust sector remains mired in financial troubles, progress has been made on the debt restructurings of some trust companies with their creditors. Creditors of Dalian International Trust and Investment Corp (Ditic), the investment arm of the Dalian municipal government, agreed to write off 40 per cent of their US$150 million exposure to the company, it was revealed yesterday. The restructuring plan involves the purchase, by an independent entity, of the creditors' loans at 60 per cent of their principal amounts with cash settlement within three months of the signing of legal agreements. All foreign creditors have signed the documents and the plan has the Dalian municipal government's support. Richard Taylor, managing director of CLSA Global Emerging Markets, Ditic's financial adviser, said: 'This agreement represents an important step in the reduction of the bad debt overhang for Itics [International Trust and Investment Corp] in the mainland.'