The Bank of Communications, the Industrial and Commercial Bank of China (ICBC), Minsheng Banking Corp., Ltd. and China Merchants Bank are applying to establish their own aircraft leasing companies, an industry insider told Xinhua Monday.
Minsheng Bank is estimated to be investing 3.2 billion yuan while the other three are thought to be investing two billion yuan respectively, said Yang Boqin, a senior official with Shanghai Ronglian Finance Leasing Share Co. Ltd.
"China is expected to approve the four leasing companies by year end or early next year," he said. "More banks and financial institutions will join if they prove successful."
China Construction Bank (CCB) together with the four banks were listed in a pilot group when the Measures for the Administration of Finance Leasing Companies took effect on March 1, allowing Chinese banks to hold stakes in finance leasing companies.
Earlier this month, a financial leasing company jointly set up by China Construction Bank and Bank of America was approved while the Bank of China, the nation's second largest bank, bought Singapore Aircraft Leasing in 2006.
"In the United States, about 30 percent of large operating equipment, including aircraft and ships, are leased compared with only three percent in China, which indicates a huge potential market," said Yang.
"However, in the Chinese airline sector, about 70 percent of aircraft are leased and 90 percent of them are leased through overseas companies," he said.
"Given the numbers, you can understand why the banks want to set up their companies," he explained. "The move could also help China change its rocketing trade surplus."
Airbus and Boeing have forecast that China would obtain 2,880 aircraft worth 300 billion U.S. dollars in the next 20 years.