Research On The Development Of Bank-established Financial Leasing Companies In China

The word "lease" was created around 2010BC. It is a transfer of the right of possession, use and income of the property for the purpose of collecting rent. Its development can be divided into 4 phases:ancient, traditional, recent and modern lease. Financial leasing (or capital leasing) is an important form of modern lease. Different from commercial credit, bank credit or financial trust, financial leasing is a financial activity comprises of finance, trade and technique, with both asset and capital leasing function. It can promote economic growth, increase employment and raise tax revenue. At present, the lease penetration rate of lease could reach 20% to 30% in developed economies, and has become the second financing form only to bank credit. However, in 2009, the investment of lease and commercial service in China is only 188 billion RMB. and its penetration rate is a mere 3.43%. The development of financial leasing in China is far behind that of open market and financial business.On March,2007, "Administrative Measures to Financial leasing Company", which revised by China Banking Regulatory Commission (CBRC), came into effect. It allows qualified commercial banks and other financial agencies to establish or equity-participate in financial leasing company. Promoted by the measures, a batch of companies came into being, such as ICBC Financial Leasing Co., Ltd., CCB Financial Leasing Co., Ltd., BOC Financial Leasing Co., Ltd., CMB Financial Leasing Co., Ltd., Minsheng Financial Leasing Co., Ltd., etc. Until late 2009, they were in leading positions with their total assets respectively reached 33,8.2,15.3,10.2 and 23.6 billion RMB, as well as their net profit reached 182,124,155,90 and 161 million RMB. Due to their bank background, these 5 bank-established financial leasing companies achieved outstanding performance by taking advantages of high registered capital, insured financing channel, high capital adequacy rate, and sufficient technique and resource from parent bank. The bank-established financial leasing companies in China possess strong finance background and assets management experience, sufficient client resource and financing channels, as well as various business fields, human resources and techniques. Meanwhile, they also suffer from their disadvantages such as high leasing cost, insufficient experts, investing and financing limits, and low net profit and shareholder return. Under the policy promotions like 4 trillion economic stimulus plan, they are facing the potential opportunities of raising capital efficiency, accelerating commercialization, balancing supply and demand and boosting economic restructuring. They should seize the opportunity to accelerate development, and achieve the maturity of the whole financial leasing business. However, for those companies, certain threats still exist, including insufficient laws and regulations, imperfect policy environment, the merging of financial and operation leasing, questionable financial regulation pattern and outdated information. They are their fatal problems to be solved.Aiming at the circumstances, advantages and disadvantages, opportunities and threats of bank-established financial leasing companies in China, I proposed the following suggestions to their development:First, policy environment should be perfected, including respective laws and regulations, supportive policies and regulation systems; Second, financing channels for those companies should be widened:at first, policy financing to those qualified companies should be given, then support them to be listed on the stock market, after that asset securitization should be developed; Third, Information process of the financial leasing should be accelerated, including the unifying the management of services, products, clients and files; Forth, creation of leasing products should be promoted, including factoring, oversea loaning and system leasing; Fifth but not least, suggestions to marketing channels and fund management.