26th November, 2012:

The Chinese Securities Regulatory Commission (CSRC)[1] recently gave approval to a project of securitisation proposed by Industrial & Commercial Bank of China Leasing (ICBC Leasing). The deal involves offering of at least US$ 261 in Asset Backed Securities (ABS). This is the first securitisation deal from a leasing company in China.

ICBC Leasing is a wholly-owned subsidiary of ICBC[2] which is regarded to be China’s largest commercial lender. ICBC Leasing is the first ever leasing company which is owned by a banking institution approved by the China Banking Regulatory Commission (CBRC)[3]. ICBC is the biggest aircraft and shipping financing bank in China. ICBC Leasing was formed mainly to deal in shipping, airplane and large scale equipment to provide leasing to the domestic and foreign investors.

The latest ABS deal from ICBC Leasing will be tied to the assets in the aviation industry, rail and shipping projects with high credit ratings. ICBC Leasing has not provided any time span for such a sale yet. This deal will mark the first Customer-Asset-Management-Plan (CAMP) styled ABS issue in China. Customer asset Management may be defined as, "the optimized use of a firm’s tangible and intangible resources in order to facilitate a profitable current and future customer relationship"[4]. A Customer-Asset-Management-Plan will be designed differently for different customers with different portfolios to increase customer equity. Thus, different approaches will be required for different deals to maximize the profitability of the issuer and the investors as a whole.

Post 2007 financial crisis the Chinese government started allowing domestic banking institutions to develop financial leasing business under the supervision of the CBRC. This has enabled the lease operators to increase their assets manifold and strengthen the economy of the country to a great extent.

[1] http://www.csrc.gov.cn/pub/csrc_en/

[2] http://www.icbc.com.cn/ICBC/sy/ 

[3] http://www.cbrc.gov.cn/showyjhjjindex.d

[4] https://helda.helsinki.fi/bitstream/handle/10227/388/203-978-952-232-050-6.pdf?sequence=2


[Reported by: Piyush Sinha]

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