China's financial leasing firms report growing assets

GMT 00:20 2015 Thursday ,10 September

Arab Today, arab today China's financial leasing firms report growing assets

China's financial leasing firms
Beijing - XINHUA

Assets of 39 financial leasing companies supervised by the China Banking Regulatory Commission (CBRC) topped 1.45 trillion yuan (227.4 billion U.S. dollars) by the end of June, the top banking watchdog said Wednesday.

Total assets saw a 13.4-percent increase from the beginning of the year.

Financial leasing companies purchase assets for other firms, which pay a rental fee for use of those assets. After the lease is up, the firms have the option to acquire the asset from the financial leasing company.

It is favored by startups and companies with weaker credit as the service is cheaper and more tailored to borrowers' needs than traditional loans.

China revised its regulations on financial leasing companies in 2007, allowing financial institutions to participate in or set up financial leasing companies.

The dominant shareholders of 23 of the financial leasing companies are commercial banks, accounting for 59 percent of the total. Four companies have asset-management companies as their controlling shareholders, and the other 12 companies are categorized as other types, the CBRC said.

Confronted with a sluggish real economy, China has started to rely on the emerging financing channel to aid small companies and facilitate industrial upgrades.

China's cabinet, the State Council, on Monday rolled out favorable measures on financial leasing, including cutting red tape, improving regulation and support from other financial institutions to accelerate development of the sector, as well as encouraging government agencies to purchase and provide public services through financial leasing.

China plans to develop the industry into a world-class sector in terms of market size and competence by 2020.

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