What are the advantages and disadvantages of financial leasing to banks?

Due to the relatively strict supervision of banks by the state, banks were not allowed to carry out financial leasing business after problems were discovered in the late 1980s. Despite the deterioration of the external economic environment, leasing companies and banks lack the research on the function of financial leasing, and there is a huge deviation in their positioning: leasing companies regard themselves as lending banks (because there is financing in financial leasing) and banks regard themselves as trading companies (there is trade in financial leasing), which leads to business failure. It is also an important reason why leasing companies give up their main business and banks talk about rent discoloration. But these failures are not the fault of financial leasing, but more because of the process of institutional transition.

In the new century, the external environment of financial leasing has gradually matured, and the relationship between leasing companies and banks has changed. Banks themselves are calling for opening up the mixed operation of financial leasing. There are several reasons why they changed from talking about rent to favoring financial leasing:

1, China's economic reform has gradually turned to marketization, the market mechanism has surpassed government intervention, and the marketization in the financial sector has also made great progress. The separation of central bank's currency and supervision has completely ruined financial institutions, and financial institutions must find jobs in the market;

2. Policies and regulations tend to be perfect, especially the four pillars that are conducive to the development of financial leasing: law, accounting standards, supervision and taxation, which are still constantly enriched and improved, and the further development of financial leasing has been guaranteed by law;

3. China's economy has developed to a certain extent, and the traditional business model has not adapted to the sustainable development of the economy. Industry innovation forces financial institutions to turn their attention to financial leasing, a combination of finance and trade, in an attempt to find a breakthrough from here.

4. There is a contradiction between the rapid development of China's economy and the imperfection of its financial system. On the one hand, the development of enterprises is in urgent need of funds, on the other hand, banks have a lot of deposits and loans, but they are in a state of "sparing loans" because they don't have good financing tools and means, so banks have a lot of funds to find a way out;

5. The theory of financial leasing is basically established, the leasing company has changed from simple financing to technical services, the function of leasing has gradually developed, and the ability of leasing to control risks has gradually emerged. Leasing has expanded from simple financing to financial management and asset management. The positioning of leasing companies has also changed from loan banks to service trade. The profit source of leasing companies no longer depends on spreads, but more on services, so they get rid of the competitive relationship with banks and change into the relationship between services and services.

6. Frequent media reports have also made people pay attention to financial leasing, hoping that financial leasing can bring new business opportunities to banks (enterprises).

1. Help banks issue equipment loans.

The competition for bank equipment loans is fierce, good projects cannot be grabbed, and second projects are unwilling to do. There must be such a project in the screening project, which is a pity if you don't give up if there are risks. At this time, the leasing company can reduce the risk and increase the income through financial leasing. Reasons: first, financial leasing provides equipment to leasing enterprises, not funds, and enterprises will not misappropriate loans and spend money indiscriminately; Second, the interest rate used through leasing is the market interest rate, which is not limited by the central bank's interest rate, and the risk is directly proportional to the income; Third, once the leasing enterprise goes bankrupt, the leased assets will not participate in liquidation, while retaining the creditor's rights; Fourthly, through the closed operation of the leasing company, the accounts of the leasing company and the leased enterprise can be transferred to the bank providing funds for unified control, which reduces the risk and brings more cash flow to the bank.

2. Cooperate with the bank's wealth management business.

In order to solve the problems of excessive deposit funds, high risks and low returns, banks are developing in the direction of financial management on behalf of customers. On the one hand, it does not take risks, on the other hand, it increases income. Financial management needs good projects. Banks can find a considerable number of safe and profitable leasing projects through leasing companies (it depends on the operating ability of leasing companies and the risks of the projects themselves), absorb private funds through financial management, and then invest the funds into good projects through entrusted leasing (generally encouraged and supported by the government or with relatively stable cash flow).

Another common practice is factoring. Its practice is that the leasing company plans and packages the project by integrating social resources, making it a low-risk and high-yield leasing project. If the bank is interested, it can buy out the lease right of the leasing company, the leasing company will end the project ahead of schedule to develop new projects, and the bank can find projects with strong anti-risk ability without blowing off dust. Because the selection, planning and integration of projects need a process, the projects to be sold by leasing companies are in short supply.

Of course, banks and leasing companies still have more room for cooperation in financial management. The suggestions in this paper are summarized on the basis of successful cooperation between banks and leasing companies. In fact, the first example is that the leasing company obtains low-cost funds through banks, and the second example is close to the securitization of leasing contracts. Their role is to promote private investment through leasing.

3. Help banks solve the problem of excessive investment in fixed assets.

A few years ago, due to out-of-control investment, the investment ratio of banks was too large. After the CBRC strengthens supervision, the investment in fixed assets of banks shall not exceed 30% of their own assets. Facing the development of society and the progress of science and technology, the services in the financial field have made great progress in hardware. If banks don't use these advanced equipment to increase their competitiveness, they will be eliminated. However, investment is limited by regulatory indicators, so it becomes an obstacle to development. If the bank leases its fixed assets through leaseback or operating lease, it can not only increase the investment ratio and increase the equipment utilization rate, but also will not affect the index limit of the regulatory authorities.

1. Leasing companies need to obtain extensive funds from banks.

2. Get low-cost funds through cooperation.

Although leasing companies need a lot of money, if the cost of capital is too high, this demand will plummet. Because the cost of financing through leasing companies is high, the market will be lost if the cost of capital sources is too high. However, banks will not give low-interest loans to leasing companies for no reason (which is not allowed by current policies). Only through the financial management mentioned above can the financing cost be reduced, so the premise of using low-cost funds is cooperation. Leasing companies need to know more about the types of services provided by banks in order to study a wider range of cooperation methods.

3. Strengthen the control of the lessee's cash flow through the banking network.

Most of the leasing company's funds are borrowed from banks. However, when there is a problem with the leasing company, the bank will help the leasing company hide its account or transfer funds for the sake of confidentiality when it cancels its account in the bank through legal means for its own immediate interests. Therefore, the leasing company can't get the money back and can't repay the bank loan. How to get out of this strange circle depends on the cooperation between banks and leasing companies. Banks are rich in network resources. Whether these networks can provide leasing services for leasing projects is very important not only for leasing companies, but also for banks. On the one hand, these networks assume the channel role of cash flow, on the other hand, they are responsible for monitoring the credit of leasing enterprises. Once there is a problem, the bank should also help the leasing company to prevent the enterprise from maliciously defaulting from its own perspective. In order to solve the legal and management problems, the leasing company should obtain the service commitment of the bank and the approval of the lessee when signing the lease contract.

4. Need to enjoy the credit platform.

Financial institutions in China have established a credit network for loan enterprises. Leasing companies of financial institutions can enjoy it, and financial leasing companies of non-financial institutions cannot enter this system. Therefore, when evaluating a project, it is difficult to grasp the real debt status and solvency of the enterprise, and then the help of the bank is needed.

Since the financial leasing company changed the situation of being out of touch with its main business, it began to operate financial leasing after capital increase and share expansion and asset reorganization, and its relationship with banks became closer and closer. On the one hand, they all belong to financial institutions; on the other hand, they reduce the risk of equipment loans through leasing, solve policy problems such as personal loan scale and bank investment scale, and broaden lending channels. For well-run leasing companies, banks will even queue up to buy projects. In the mid-1980s, foreign banks chased loans from leasing companies, but at present, domestic banks are showing this sign again, but the nature is very different. The former thinks that there is a national credit guarantee to blindly lend to leasing companies to solve the problem of excess hot money. The latter is based on the market environment, solving the difficulty of loans and opening up banking business innovation. Judging from the current situation, all innovative leasing companies have close cooperation with banks, and banks are still talking about leasing companies.

The first is the policy obstacle. The Law on Commercial Banks stipulates that banks are not allowed to lend to non-bank financial institutions, so legally speaking, financial leasing companies supervised by CBRC are not allowed to lend to banks. The CBRC failed to give the financial leasing company the financial business it should have (mainly the business of solving the source of funds: accepting the lease deposit from the relevant lessor; Accepting lease funds entrusted by legal persons or institutions; Issuing financial bonds with the approval of the People's Bank of China; Borrowing from financial institutions; Foreign exchange loans; Interbank lending business; Therefore, financial leasing companies of non-bank financial institutions are not as easy to cooperate with banks as financial leasing companies of non-financial institutions.

Secondly, the mixed operation of banks. Seeing the benefits of financial leasing, many banks are calling for the opening of financial leasing business. Banks in developed countries generally have financial leasing business, but it is limited to simple financial leasing. What is the reason? From the failure experience of Chinese banks in developing financial leasing business, it can be seen that the main business of banks is finance, and financial leasing is an industry combining finance and trade. The financial leasing business of banks is bound to expand to the trade field. However, finance and trade are interdependent industries. Imagine that if a well-funded enterprise makes a transaction, the result will be either monopoly or market chaos. So banks can't do trade, and commercial enterprises can't do banks, which is the reason. It is also for this reason that China has only allowed banks to carry out financial leasing business for two or three years, and the ban has not been lifted. When to open depends on the opening schedule of China's financial mixed operation. Even if it opens, it is estimated that it can only operate simple financial leasing business in terms of equipment. This provides opportunities for cooperation between banks and leasing companies. Leasing companies should vigorously carry out innovative leasing business, reduce the credit risk in the process of financing through technological innovation, and provide more outlets for banks. Banks also take advantage of financial instruments to facilitate leasing companies to control risks. The cooperation between the two parties will promote the healthy development of financial business in the investment and financing field in China.