CHINA Merchants Bank yesterday started operations of its financial leasing arm in Shanghai as it bids to grow into a global financial player.
The Shenzhen-based bank invested 2 billion yuan (US$286 million) into CMB Leasing Co after the central government allowed banks to set up such financial leasing firms. CMB Leasing is one of five such firms established by banks.
CMB Leasing targets small- and medium-sized enterprises with growth potential and is eying clients in the Yangtze River Delta, the Pearl River Delta, the Bohai Rim area and high-tech parks.
The bank yesterday signed strategic cooperation deals with the other four financial leasing firms from Industrial & Commercial Bank of China, China Construction Bank, Bank of Communications, and China Minsheng Banking Corp.
Merchants Bank yesterday also signed deals with three industrial firms - Shanghai-listed Sany Heavy Industry Co, Shaanxi Coal and Chemical Industry Group Co and Huaneng Lancang River Hydropower Co.
The financial leasing industry in China has yet to take off but it is expected to help meet strong demand for equipment including ships and planes as the economy keeps growing.
Rules on the industry, which were revised in 2007, require new firms to have a minimum capital of 100 million yuan and with major shareholders being commercial banks, equipment makers and other financial firms.
The bank's first quarter profit soared 150 percent to 6.32 billion yuan. The bank rose 4.21 percent to 32.42 yuan yesterday. The Shanghai Composite Index gained 4.15 percent to 3,278.33.