January 9, 2020 / 3:27 AM / 19 days ago

China issues rules to clean up troubled $577 billion financial leasing sector

BEIJING (Reuters) - China issued draft rules to tighten oversight of its financial leasing sector, which has total assets of more than 4 trillion yuan (440.64 billion pounds), in its latest effort to curb financial risks.

The country had 10,900 leasing firms as of the end of June last year, but 72% were shell companies or had halted their business, the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement on its website on Wednesday.

The new draft rules require leasing firms to reduce their holdings of risky assets, and not to overly finance one single client.

Some firms in the fast-growing sector have deviated from their main business of offering financing and leasing services to companies, the CBIRC said in a separate explanatory statement.

The industry needs a prudent and consistent regulating system to guide those companies to focus back on their main business, the CBIRC said.

The regulator added there would be a two-year grace period to clean up the industry.

Reporting by Zhang Yan and Ryan Woo; Editing by Kim Coghill

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