Minsheng uses aircraft business to expand overseas

While many of the big names in mainland banking have expanded overseas by opening branches or acquiring foreign assets, China Minsheng Bank has adopted a different approach and is building its brand through aircraft leasing.

Its Minsheng Financial Leasing unit, one of the first five mainland financial leasing companies with a banking background to be approved by the China Banking Regulatory Commission, has recently expanded its private jet leasing to commercial aircraft after setting up Minsheng Commercial Aviation in Hong Kong.

Mainland banks' aviation units are gaining a foothold in the global aircraft leasing market on the back of abundant liquidity and strategic retreats by Western counterparts hit by the global economic downturn.

BOC Aviation, backed by Bank of China, was the sixth-largest lessor in terms of fleet value in 2012, according to a report by accounting firm PricewaterhouseCoopers. BOC Aviation and the leasing unit of Industrial and Commercial Bank of China were rumoured to have been eyeing the acquisition of American International Group subsidiary International Lease Finance Company between late 2008 and early 2009.

"We [Minsheng Bank] are quite new to the market with less than 20 years," said Johnny Lau Ho-yin, managing director of Minsheng Financial Leasing's aircraft leasing division and chief executive of the newly-established commercial aviation arm.

"Expanding to the commercial aviation business can help pave our way to internationalisation," he said, while adding that the bank was also looking to open branches in other countries.

Minsheng Commercial Aviation is seeking to build relationships with the big names in aviation by buying aircraft in the secondary market or directly from aircraft manufacturers and then leasing the planes to airlines.