State-run Hua Nan Commercial Bank (華南銀行) yesterday set up a capital leasing unit to tap its home, as well as China’s, market, the lender said in a statement.
With capital of NT$1 billion (US$33.33 million), the new leasing company aims to establish a branch in Shenzhen, China, next quarter, the statement said.
The planned branch will have NT$600 million in capital, allowing it to join forces with its Taiwanese parent and Hua Nan Bank’s Shenzhen branch to better serve Taiwanese firms in the region.
“Hua Nan Bank, the banking arm of Hua Nan Financial Holding Co (華南金控), will mobilize all its resources, including 185 branches in Taiwan, to help meet capital demand of all customers,” the statement said.
There is an ample room for leasing firms to grow business in China, where banks can lend only 75 percent of deposits collected and most loans are restricted to large companies, the statement said.
Loans to small and medium-sized enterprises account for 10 percent of such business, lower than the 30 percent average in Taiwan, the statement said, adding that many Taiwanese firms have difficulty raising funds because of their modest scale of economies.
The leasing company plans to set up a second branch in Shanghai next year, the statement said.
The new venture is expected to help boost Hua Nan Bank’s profitability as interest spreads range from 9 percent to 15 percent for capital leasing firms in China, compared with 4 percent to 7 percent in Taiwan, said York Lai (賴銘佑), chairman of the new leasing company.