Source: Shanghai Daily Author: Zhang Fengming 06/28/2008
Subject Concerned: Aircraft Airlines
Industrial and Commercial Bank of China (ICBC) is in talks to lease planes to airlines including Air China and China Southern Airlines, the bank's vice president said on June 27.
On June 27, the bank's leasing arm leased three A430 aircraft worth 1.3 billion yuan (US$190 million) to China Eastern Airlines for six years.
The unit hopes to persuade more airlines to lease jets, said Li Xiaopeng, vice president of the Beijing-based bank and chairman of its leasing arm.
China Eastern Airlines has about 230 aircraft, of which it owns one-third.
ICBC has signed a deal to lease four aircraft to Shenzhen Airlines.
The bank's leasing arm has assets worth 5 billion yuan. The country's biggest bank set up the financial leasing firm with registered capital of 2 billion yuan last year.
The leasing company, registered in Tianjin, focuses on the aviation, shipping and other large-equipment sectors for global and domestic clients.
China is encouraging more qualified banks to step into the financial leasing business. Overseas players are also looking at the rising demand in China.
Pembroke Group, a wholly owned subsidiary of Standard Chartered Bank, is also in "active talks" with two Chinese airlines for aircraft operational leasing, said Garry Burke, chief executive officer of Pembroke, in Shanghai.
The firm has leased aircraft to China Southern and China Eastern.
"China is a significant market for Pembroke and also a stable market," Burke said. "The company doesn't limit our clients as we target state-owned and private airlines, as long as they are seeking fuel-efficient models," he said.
Operational leasing accounts for 40 percent of the airline finance market now, up from about 20 percent in the 1990s.
Airline passengers have grown at a compound annual growth rate of 10 percent in China since 2000.
The finance leasing industry has been in China for two decades but is yet to take off.
China last year revised the rules on financial leasing companies. New firms are required to have a minimum capital of 100 million yuan and major shareholders must be qualified financial players.