The National Financial Regulatory Administration recently revised and issued the "Regulations on the Administration of Financial Leasing Companies",aiming to deeply implement the spirit of the central financial work conference,further strengthen the supervision of financial leasing companies,prevent financial risks,optimize financial services,and promote high-quality development of the real economy.

The "Regulations" mainly revised and improved the system of major shareholders of financial leasing companies,and at the same time,further strengthened the classification supervision of business,strengthened corporate governance supervision,strengthened risk management,and in addition,also standardized the financing leasing business of financial leasing companies,requiring the improvement of business operation rules.

The "Regulations" will be implemented from November 1,2024.

The industry believes that the revision of the "Regulations" is conducive to further strengthening the supervision of financial leasing companies,preventing financial risks,improving the positioning of institutions,optimizing financial services,and will greatly promote the high-quality development of the industry.

Significantly raising the threshold for entry,the proportion of shares held by major shareholders is not less than 51%.

The "Regulations" have made a significant revision to the system of major shareholders,including raising the minimum registered capital of financial leasing companies,adding three types of major shareholders: state-owned capital investment and operation companies,state-owned financial capital investment and operation companies,and overseas manufacturing enterprises,appropriately raising the market access standards such as total assets,operating income,registered capital of major shareholders,and the minimum shareholding ratio requirements.

Among them,the shareholding ratio requirement for major shareholders of financial leasing companies has been raised from not less than 30% to not less than 51%.

When discussing why to raise the minimum shareholding ratio requirement for major shareholders of financial leasing companies,the person in charge of the Financial Regulatory Administration said that it was mainly for three reasons.

First,from the perspective of regulatory practice in recent years,raising the shareholding ratio of major shareholders is conducive to solidifying shareholder responsibilities,better leveraging shareholder resource advantages,and promoting shareholders to actively play a supportive role.

Second,it is conducive to improving decision-making efficiency and avoiding issues such as the failure and imbalance of corporate governance due to excessive dispersion of equity.

Third,it is conducive to clarifying the major shareholders and actual controllers of financial institutions,and preventing shareholders from evading supervision and illegally controlling or even emptying financial leasing companies through means such as proxy holding and concealing consistent action relationships.

"At the same time,in order to avoid major shareholders illegally interfering in the operation and management of financial leasing companies,the 'Regulations' have specifically added supervisory requirements in terms of corporate governance,shareholder obligations,and related transactions,forming effective constraints and positive interaction between the internal and external of financial leasing companies."

The person in charge said.

Guiding financial leasing companies to focus on their main responsibilities and businesses to help the real economy achieve high-quality development.

The person in charge of the Financial Regulatory Administration said that after years of development,the business model and risk characteristics of financial leasing companies have undergone significant changes,and the existing regulations can no longer meet the high-quality development and regulatory needs of the industry.

At the same time,in recent years,financial regulatory authorities have introduced a series of regulatory systems and regulations in aspects such as corporate governance,equity management,and related transaction management.

The "Regulations",combined with the actual situation of the financial leasing industry,further supplement and improve relevant content,and strengthen the connection with existing regulatory regulations.

XU Yizhou,an analyst at Xingye Securities,said that compared with the original "Regulations on the Administration of Financial Leasing Companies" issued in 2014,this revision of the "Regulations" has raised the minimum shareholding ratio requirement for major shareholders of financial leasing companies; adjusted the business scope of financial leasing companies,distinguishing between basic business and special business,and implementing classified management of overseas business; and optimized and adjusted regulatory indicators.

"The 'Regulations' were publicly solicited for opinions in January of this year,and most of the rationalization suggestions and opinions from all parties were adopted,and the opinions not adopted were mainly concentrated on blindly lowering regulatory requirements and not fully understanding the regulatory provisions."

The person in charge said,"Regarding the content of regulatory interpretation and implementation transition period arrangements proposed by some feedback opinions,the Financial Regulatory Administration will issue separate documents to clarify."

XU Yizhou believes that the continuous introduction of regulatory policies for the financial leasing industry,risk prevention and control,and returning to the origin are still the key words for industry development.

The competition in the industry has further intensified,and regulatory requirements have guided the industry to return to the origin of leasing business.

Previously,the Financial Regulatory Administration also issued the "Notice on Printing and Distributing the Encouragement List,Negative List,and Positive List of Project Company Business of Financial Leasing Companies",guiding financial leasing companies to better play their characteristic functions,provide professional financial services,and help the real economy achieve high-quality development.

Gong Chen,from the financial institution department of New Century Rating,believes that the supervision has been continuously guiding financial leasing companies to return to the origin of "financing + financing goods",optimize business planning according to national major strategies,adjust business structure,tilt resources to promote the construction of modern industrial systems,and support the development of new quality productive forces.

Data shows that by the end of 2023,there were 71 financial leasing companies in China,with a total asset scale of 4.18 trillion yuan,a year-on-year increase of 10.49%; the balance of lease assets was 3.97 trillion yuan,a year-on-year increase of 9.27%.

Since 2023,financial leasing companies have increased the business investment of direct leasing models,with a direct lease business investment of 281.487 billion yuan in 2023,a year-on-year increase of 63.39%,accounting for 16.42% of the total lease business investment,a year-on-year increase of 4.31%.

New regulatory indicators further increase regulatory strength.

The regulatory indicators of the "Regulations" mainly show three changes.

First,new leverage ratio and financial leverage multiple indicators.

As non-bank financial institutions that do not accept public deposits,to avoid their blind expansion,the "Regulations" add new regulatory indicators such as leverage ratio and financial leverage multiple.

Among them,the leverage ratio indicator should not be lower than 6%,and the financial leverage multiple indicator should not exceed 10 times.

Second,optimize the regulatory indicators of loan loss provision coverage ratio and interbank borrowing ratio.

In line with the counter-cyclical regulatory approach,the loan loss provision coverage ratio has been reduced from not less than 150% to not less than 100%,supporting financial leasing companies to increase support for the real economy on the basis of ensuring that loss provisions can effectively cover expected credit losses.

The scope of the interbank borrowing ratio is expanded from interbank borrowing business to both interbank borrowing and lending business.

Third,new indicators such as lease receivable provision ratio,liquidity ratio,and liquidity coverage ratio have been added to further improve the regulatory indicator system.

"For the specific calculation methods and values of liquidity ratio and liquidity coverage ratio,the Financial Regulatory Administration will study and determine separately in combination with the actual situation of the industry."

The person in charge of the Financial Regulatory Administration said.

The industry believes that the "Regulations" will further strengthen the supervision of financial leasing companies,prevent financial risks,guide financial leasing companies to adhere to the function positioning of financing and financing goods,return to the origin of leasing business,support large-scale equipment updates,help improve the development of new quality productive forces,and promote the high-quality development of the real economy.