Bank of America and China Construction Bank have announced an agreement to jointly enter into a new leasing business aimed at providing innovative leasing products for the rapidly growing Chinese economy.
The new stand-alone entity will be China's first joint agreement between a foreign investor and Chinese bank to launch a financial leasing company. The new business will combine Bank of America's leading leasing and risk management expertise with China Construction Bank's market strength.
Bank of America will acquire 24.9 percent of the new company, which is expected to launch by early 2008. Both banks will have board of director representation and be a part of the new company's senior management team.
The company will initially focus on leasing new or used equipment and facilities to customers in China's power generation and transmission and rail industries. It will also focus on finance leasing, taking fixed deposits of one year or more from shareholders, accepting leasing deposit from lessees, transferring rental receivables to commercial banks, issuing financial bonds upon approval, providing inter-bank loans, obtaining loans from financial institutions, obtaining foreign exchange loans from overseas, selling and disposing of residual value of leased items, economic consulting and any other business approved by the China Banking Regulatory Commission.
The commission has approved the two banks preparing for the establishment of the new company.
"This is another benefit of our close partnership with CCB," said Kenneth D. Lewis, Bank of America chairman and chief executive officer. "We are looking forward to further serving the growing Chinese market."
This is the fourth customer program offered jointly by the two banks following the successful launch of their free ATM withdrawal, remittance services and joint credit card venture. In June 2005, Bank of America became a 9 percent shareholder of CCB and began providing advice and assistance to CCB in such areas as consumer banking, treasury services, governance and risk management designed to enhance the Chinese bank's performance.