China Development Bank, one of the country's three policy banks, is planning to invest over 7 bln yuan in Shenzhen Financial Leasing Co Ltd, taking a 90 pct stake in the latter, the official Shanghai Securities News reported, citing sources.

The capital injection will make SFL the largest financial leasing firm in China, the report said.

SFL currently has registered capital of 716 mln yuan, with Hainan Airlines Group the largest current shareholder with a 21.66 pct stake, according to the report.

Xi'an Aircraft Industry Co, the parent of Xi'an Aircraft International Corp, also owns 18.16 pct of SFL, it said.

In October 2007, State Grid Corp, one of China's two state-owned power transmission firms, said it was selling its 3.21 pct stake in SFL for a minimum of 16.10 mln yuan.

SFL reported a 2006 net profit of 11.00 mln yuan, compared with 1.26 mln a year earlier, State Grid said in a statement to the Shanghai United Assets and Equity Exchange.

In January 2007, China's banking regulator issued new rules permitting qualified local and overseas-incorporated commercial banks to apply to set up directly-controlled lease finance companies. Leading domestic lenders including Industrial and Commercial Bank of China, China Construction Bank and Bank of Communications have since established lease financing units.

China Development Bank has reportedly won central government approval to restructure itself into a commercial bank. The bank is expected to bring in strategic investors soon ahead of going public.