Leasing boss Guo ‘disappears’ ahead of first big overseas deal

Top ship financier Guo Fangmeng (Bill Guo) is said to be the latest leading rainmaker from the Chinese ship-leasing market to be taken away for questioning.

Guo is the global head of shipping finance for Beijing-based of Citic Financial Leasing (Citic FL) and formerly a leading executive with ICBC Financial Leasing.

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The apparent detention comes at a time when Citic FL had just won official approval to step up from domestic ship finance to dollar-denominated deals.

TradeWinds has reported on a series of renminbi-denominated orders by Citic FL on behalf of domestic end users.

But TradeWinds is also aware of a bulker order now in preparation on behalf of an unnamed foreign owner, which was to have been Citic FL’s debut in international ship finance. That deal became possible after Citic FL won a licence to do dollar-denominated financing through a subsidiary in Tianjin’s special economic zone.

If the reports are correct, Guo is the ninth ship-finance figure to fall foul of the Communist Party’s Central Commission on Discipline Inspection (CCDI) this year.

So far, there has been no official announcement from Beijing or Citic FL about Guo. But the internationally orientated shipping man has not been reachable by mobile phone since last week, and multiple sources have told TradeWinds that the CCDI had “taken away” Guo on or around 31 August.

That term is commonly used for extrajudicial detentions by the CCDI, an internal Communist Party organ whose actions are not legally arrests.

A Citic FL executive who TradeWinds contacted declined to comment when asked about Guo’s current status.

One Asia-based shipowner who, like others, was unwilling to be identified believed the campaign targeting Chinese leasing houses will affect the industry but the magnitude will be contained.

“In the short-term, Chinese ship-leasing companies will be slowing down their lending facilities by being less aggressive in marketing their activities and sealing deals,” the Asian shipowner said. “They will practise stricter compliance and vetting of clients’ credit risks.”

However, he thinks the arrest of “a few people” will not render Chinese leasing companies from stopping their ship-financing activities, which have been growing in the last decade.

One official of a leading Chinese state-owned ship-leasing company believed business will not suffer from the detentions, but that the leasing industry has become much more cautious about the use of third-party arrangers in selecting clients.

But one shipbroker told TradeWinds that he thinks the “golden time” for Chinese ship leasing is over because of the negative impact of the detentions.

Chinese lenders have played an important role in ship financing for more than a decade. A timely change in financial regulations that liberalised financial leasing allowed Chinese money to move to fill the shortfall in ship finance caused by the withdrawal of traditional Western banks after the collapse of the global financial market in 2008.

Now, Chinese lessors account for about $70bn to $80bn in ship finance each year, equivalent to the portfolios of the five largest European and North American shipping banks combined.

Beijing-based Citic is a state-owned investment house established in 1979 at the beginning of China’s post-Mao opening and liberalisation period with the blessing of Deng Xiaoping, who is believed to be connected to the private fortunes of certain prominent Chinese families. But in ship lease financing, Citic FL is a newcomer. The financial house hired Guo in April 2021 to help spearhead its move into the industry.

Prior to joining Citic FL, Guo was the managing director in shipping finance for ICBC Leasing for some eight years.

Unlike many of his colleagues in the mainland ship-finance industry, he has an international career background in liner shipping.

Since bringing in Guo, Citic FL was said to have ordered 15 ultramax bulker newbuildings at Dalian Shipbuilding Industry Co (DSIC) and had earlier also bought a secondhand supramax bulker

Citic FL was said to have ordered the newbuildings against charters from domestic operators including Cosco Shipping Bulk. However, sources following Citic FL closely said 10 newbuildings were chartered out to Fujian Guohang and the other five to Zhejiang Shipping.

A few shipbuilding players said Citic FL is close to concluding two newbuilding contracts that involve eight ultramaxes and two newcastlemaxes with unnamed state-owned shipyards. But with Guo’s disappearance, they do not know if the deals will be going ahead.