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Shanghai revs up supervision on leasing

SHANGHAI has kicked off a campaign to further regulate illegal fund raising operations and cross-border transactions through leasing companies, Shanghai Municipal Commission of Commerce said today, a sign of regulatory tightening amid the national crackdown on financial risks.

The campaign will target all domestic and foreign-invested leasing companies registered in Shanghai, with a focus on those who affiliated to Internet finance companies, investment consulting firms, wealth management companies, and small loan lenders, according to the notice.

Shanghai had 1,216 leasing firms on record by the end of 2015, accounting for nearly one-third of the national number, according to data compiled by the Ministry of Commerce.

Total assets of China's leasing industry stood at around 3.2 trillion yuan (US$464.52 billion) by end of 2015, compared with 1.9 trillion yuan two years ago, according to an earlier calculation done by rating agency Moody's.

More than half of the underlying assets of Chinese leasing companies are in aircraft, shipping, equipment, and infrastructure, while the notice pointed out that some firms had started to lease intangible assets and limit-circulated assets such as raw material precious metals, which will cause “risks and hidden troubles for the leasing industry.”

Others, who mainly targeted in this campaign, started to provide unauthorized loans, interbank lending, even equity investment and cross-border investments, market insiders said.

The campaign will scrutinize leasing firms’ operations, and examine whether firms faked leasing projects or using illegal leasing assets, bragged itself as financial institutions with licenses and raised funds from the public without regulator’s approval, according to the notice.

The campaign will sustain to June 24, with main approaches include self-inspection and spot checks by the regulators, the notice said.

The government and financial regulators are reducing financial risks in the past few months by tightening the screws on financial leverage. The banking regulator said it will crack down on irregularities and tap the shadow banking businesses, echoing comments by the securities watchdog that fasten the approval of public offerings to defuse asset bubble in the stock market.


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