China
Regulators are opening doors for lessors in China with the
Industrial and Commercial Bank of China – which has just
established a new financial leasing company – leading the way.
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Capitalising on the recent easing of leasing restrictions by
China’s regulatory authorities, the ICBC will be solely responsible
for funding about $266m (£133m) worth of capital for the new
company, according to China’s Xinhua news agency.
In 1997, the Chinese government outlawed commercial banks’
investment in financial leasing companies, making it necessary to
separate different types of financial business for easier
supervision. But this was revoked in February this year, allowing
domestic and foreign banks to invest in Chinese leasing
ventures.
Bank of America was the first foreign company to enter the
revised market, forming a joint venture with the China Construction
Bank earlier this month to form a new leasing business.
The ICBC’s new leasing company will be engaged in international
leasing of large equipment such as ships and aircraft, as well as
asset management service and industrial investment
consultancy.
Also, following the strategic inroads of its competitors, GE
Commercial Finance has moved into the Chinese leasing market after
investing $50m (£25m) in Credit Orienwise Group Limited (COG), one
of China’s largest SME lenders.
As well as gaining a share of 7.8 per cent in COG, GE has also
entered into a memorandum of understanding with COG, one of China’s
fastest growing non-bank finance corporations. The joint venture
will be focused on factoring, leasing, purchase order financing and
inventory financing.
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By GlobalDataThe MOU will also see both parties expand their product and
services to Greater China’s SMEs, and an agreement by GE to provide
technical services to COG.
“COG’s strong performance and broad strategic footprint will
broaden GE’s financing capabilities and create growth opportunities
for the company,” GE said in a statement.
Furthermore, as a strategic shareholder, GE will appoint a
director to the board of directors of COG.
“We are pleased to partner with Credit Orienwise,” said Nancy
Ku, president and CEO of GE Commercial Finance China. “The
synergies between COG’s local network and our global expertise will
significantly extend COG’s market position and capabilities.”
Morgan Stanley Asia Limited was the exclusive financial advisor
to GE’s stake.
