Jan. 19, 2007 (China Knowledge) – Minsheng Banking Corp. Ltd. is partnering State Grid Corp of China (SGCC) and a Tianjin-based company that assembles Airbus A320s to set up a financial leasing company.

The Shanghai-listed Minsheng will be taking up 60% of the company, while the other two companies will each have a 20% stake, sources told the China Business News.

An unidentified official said that the China Banking Regulatory Commission (CBRC) is studying the feasibility of allowing commercial banks to establish financial leasing companies on a trial basis, adding that Minsheng is likely to become the first commercial bank allowed to set up a financial leasing company.

However, the bank’s capital adequacy ratio was down from 8.26% in January to 7.46% at the end of June, lower than the 8% benchmark set by the China Banking Regulatory Commission. This could pose a problem for Minsheng bank, as CBRC’s draft rules for setting up a financial leasing state that commercial banks must have capital adequacy ratios of above 8%. Also, the bank’s total assets in the previous full year should be no less than RMB 80 billion.

Minsheng bank is a private bank with a nationwide presence in China. Its net profits reached RMB 1.73 billion in the first half of this year, 37.7% higher compared to the same period last year. As of the end of June 2006, Minsheng Bank’s total assets amounted to RMB 625.4 billion; accounting for 1.5% of total assets in China’s banking sector or 9.7% of the combined assets of China’s joint-stock commercial banks (excluding Bohai Bank).