Shipping finance tycoon reportedly 'missing'? Has the 'golden age' of China's ship leasing industry ended?
2022-09-08 09:00
. Just as CITIC Financial Leasing was preparing to enter the international market, its head of shipping business suddenly went missing.
According to TradeWinds, Guo Fangmeng, managing director and head of the shipping business unit of CITIC Financial Leasing Co., Ltd., was taken away by the Central Commission for Discipline Inspection for investigation around August 31. Although no official announcement regarding Guo Fangmeng has been released by the government or CITIC Financial Leasing, Guo Fangmeng has been unreachable by phone since last week.
If the news is true, Guo Fangmeng is the ninth senior executive in ship finance to be investigated by the Central Commission for Discipline Inspection this year. Guo Fangmeng joined CITIC Financial Leasing in April last year, and before that, he served as the executive general manager of the shipping finance business unit of ICBC Leasing for eight years.
With Guo Fangmeng's joining, CITIC Financial Leasing accelerated the expansion of its shipping finance sector in 2021, achieving its first container ship financing lease, its first ship financing lease project, and its first delivery of ship operating lease assets. This year, CITIC Financial Leasing has placed orders for 15 65,000-dwt Ultramax bulk carriers with Dalian Shipbuilding Industry Corporation.
It is understood that CITIC Financial Leasing Co., Ltd. was established in 2015 and is an important strategic layout of CITIC Group and CITIC Bank to serve the real economy. As a wholly-owned subsidiary of CITIC Bank, CITIC Financial Leasing adheres to the development strategy of "professionalization, marketization, and internationalization," focusing on financing leasing business in major areas such as clean energy, energy-saving and environmental protection facilities, high-end equipment manufacturing, and people's livelihood. Since 2021, CITIC Financial Leasing has been deeply promoting the "limited diversification" strategic transformation. On the basis of consolidating the characteristic advantages of green leasing, it has comprehensively expanded from traditional leasing businesses such as ships and aircraft and emerging businesses such as inclusive finance and medical care, striving to create a business combination model of "one large, one small, and stable in the middle".
In August this year, CITIC Financial Leasing was just approved to establish a project company (SPV), which means that the company can now establish project companies in domestic bonded areas, free trade zones, and free trade ports to conduct financing leasing business in RMB and foreign currencies in areas such as aircraft, ships, vehicles, containers, and construction machinery, creating favorable conditions for the company's business model transformation and marking an important step in the company's professionalization and internationalization development.
After being approved to establish a project company, CITIC Leasing is reportedly preparing to order bulk carriers on behalf of a foreign shipowner, which will be CITIC Financial Leasing's first appearance in the international ship finance field. CITIC Financial Leasing hopes to take the opportunity of being approved to establish a project company to accelerate the transformation of its business model from financing-based quasi-credit business to asset-based true leasing business, focusing on risk mitigation and asset operation management of leased assets such as ships, aircraft, and vehicles.
A manager from a major state-owned ship leasing company in China believes that Guo Fangmeng's investigation will not affect CITIC Financial Leasing's business, but the financing leasing industry has become much more cautious in using third-party arrangers to select clients.
An anonymous Asian shipowner said that the actions against Chinese financing leasing companies will affect the shipping industry as a whole, but the scale is limited; in the short term, Chinese ship leasing companies will slow down lending, more strictly abide by regulations and review the credit risk of clients, but this does not mean that Chinese companies will stop ship financing activities.
However, some ship brokers pointed out that the "golden age" of Chinese ship leasing is over due to the negative impact of the detention.
Over the past decade, Chinese ship financing activities have been growing, filling the gap left by European banks significantly reducing their shipping assets since 2008. Today, Chinese leasing companies provide about US$70 billion to US$80 billion in ship financing annually, equivalent to the combined portfolio of the five largest shipping banks in Europe and North America.
According to Clarkson's statistics, as of the end of the first quarter of this year, a total of 84 Chinese leasing companies are engaged in ship leasing business. Bank-affiliated leasing companies still dominate the ship leasing market, and the top ten Chinese ship leasing companies have a fleet and backlog of 2,077 ships with a total tonnage of 120 million. Ship financing leasing has become the second largest ship financing channel after bank loans, and Chinese leasing has also become a focus in the global shipping market.
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