On November 28th, ICBC Financial Leasing Co., which is wholly funded by Industrial and Commercial Bank of China, held a grand opening ceremony in both Tianjin and Beijing. Insiders analyzed that the establishment of ICBC Financial Leasing Co. indicates that the development of financial leasing industry in China has stepped into a new stage.

It was introduced that ICBC Financial Leasing Co. was wholly funded by ICBC; its registered capital is RMB 2 billion yuan and the place of registration is Binhai New Area of Tianjin. It is the first innovative financial leasing company that obtained the opening approval of China Banking Regulatory Commission, and is also one of the biggest financial institutions established in Binhai New Area. Guided by the principal of market-oriented and specialization, ICBC Financial Leasing Co. shall develop international operation layout relying on the policy and geographical advantage of Binhai New Area (a national synthetically reform testing district as well as a coastal economic development zone), and depending on the market and brand influence of ICBC that acquired from its long-term reform and development. The company will mainly deal in the financial leasing of vessels, aircrafts and large equipment, and provide innovative financial services like leasing, rent assignment, securitization, assets management, and industrial investment consulting, etc.

A relevant principal of ICBC said that ICBC is the biggest aircraft financing bank and one of the biggest vessel financing banks of China for the moment with an extensive customer base and a considerable talent reserve. The establishment of financial leasing company is an important act of ICBC in probing into synthetic operation and development and is helpful for improving the cross-market service capability and promoting the adjustment of revenue and business structure.

Financing lease is one of the five financial forms; others include bank credit, direct financing, trust, and insurance. In 1980s, domestic commercial banks set up (or held joint stock) financial leasing companies. But the operation status came out to be unpleasant due to the imperfect industrial environment and bad management, and so on. After 1997 Asian financial crisis, commercial banks quitted from leasing industry completely and entered into divided operation period.

At the background of gradual opening of China's financial industry and the reform of commercial banks, the synthetic operation turned into an important developing trend for commercial banks. In recent years, at the same time with reinforcing financial leasing supervision, China Banking Regulatory Commission actively provided a wonderful external environment so as to promote the development of financial leasing industry actively. In March of 2007, CBRC issued Measures for the Administration of Finance Leasing Companies, allowing Chinese commercial banks to set up financial leasing companies.

In insiders' view, giving clear provisions to the main aspects of financing leasing by laws and offering more effective protection for the rights of renters will create conditions for solving policy problems like tax and supervision, and then give support to the development of financing lease.

China is a large manufacturing country of aircrafts and vessels, and is also a big shipping and aviation country. But since a long time ago, the aircraft and vessel leasing market in China has been held by foreign institutions because of the lack of competent professional aircraft and vessel leasing companies, and the further development of relevant industries has been restricted. Therefore, airplane and vessel manufacturers, shipping and aviation companies and relative experts and scholars made long-term appeal for this, and relevant government departments also made a special research, with the hope of guiding domestic financial institutions and big state-owned enterprises to set up professional leasing companies, and then improve the development of national manufacturing and transportation industry.

ICBC has made a long-term exploration on financing lease and had done lots of preparatory works.

Using advanced mode of foreign countries for reference, ICBC took the lead in the professionalized operation of airplane and vessel financing in 2005, and airplane and vessel leasing and financing also got fast development, and took a leading role in the industry in China.

At the same time with starting airplane and vessel financing business, ICBC also conducted extensive investigation and research on airplane and vessel leasing, dispatched personnel for site visit in the USA. The senior managers also led a group of people to Hong Kong and made a deep argumentation of aircraft and vessel leasing business.

In the development strategy seminar held in the end of 2006, ICBC established the "synthetic and international" operation strategy, and demonstrated clearly of "Hurry up studying and proving the scheme, and set up a financial leasing company as early as possible". Hence, ICBC formed a special work team embarking on the feasibility study.

After its successful public listing both at home and abroad, ICBC is standing at a new historical starting point, but it is also confronting with new challenges. As a listed company, ICBC needs to improve core competency increasingly and develop a new mode focusing on banking business and extending to relevant industries like financing leasing so as to improve cross-market service capability and reinforce the synergy effects of business development.

Along with the gradual approach of market-oriented interest rate, the expansion of enterprises' financing channel like short-term financing bonds, as well as the overall opening of financial industry, the market space and profiting ability of traditional credit business that domestic commercial banks rely for survival are both seriously pressed. In order to obtain better growth of non-interest revenue, and achieve the harmonious development of non-interest and interest revenues, banks have to extend business scope. Financial leasing is a practical choice of commercial banks to realize multi-fields business and diversified revenues.