The Industrial Bank of Taiwan (IBT, 台灣工銀) yesterday inaugurated a capital leasing company in Suzhou, China in an attempt to capitalize on the fast-growing capital leasing market there.
IBT International Leasing Corp (台駿租賃), fully owned by IBT via its subsidiary IBT Venture Capital Corp (台灣工銀創投), has a capital of NT$980 million (US$34.1 million) and aims to provide Taiwanese firms with yuan-lending services in the Yangtze River Delta region.
IBT International is the first leasing firm set up by a Taiwanese lender after the signing of Economic Cooperation Framework Agreement (ECFA) between Taiwan and China a year ago, chairman Hsu Ming-kuo (許明郭) said in a statement.
China’s capital leasing market was worth 700 billion yuan (US$107.9 billion) last year, rising 89 percent from 370 billion yuan in 2009, Hsu said, without saying where he obtained the figure.
A leasing firm makes profits by acting as a middleman between its customers and their equipment suppliers, providing the former with funding in exchange for fee and interest incomes, he said.
IBT chairman Kenneth Lo (駱錦明) said he expects the new leasing firm to break even this year and earn 100 million yuan in five years. Upon achieving that goal, IBT leasing plans to introduce a foreign strategic partner to expand its capital structure, the statement cited Lo as saying in Suzhou.
The ambition is not impractical given the interest spread of 8 percent to 9 percent for capital leasing in China, compared with that of 3 percent to 5 percent for banking business there, Lo said.
The infiltration rate of capital leasing hovered around 1 percent in China, far lower than the 17 percent average in advanced markets, suggesting ample room for growth, he said.
Meanwhile, the Financial Supervisory Commission said in a statement yesteday that it had approved SinoPac Financial Holdings Co’s (永豐金控) application to set up a financial leasing company in China.
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