BANK of Communications Ltd has gained regulatory approval to set up a two-billion-yuan (US$266 million) leasing unit, the bank said on its Website today.

The Shanghai-based leasing unit will be wholly owned by the bank and its business will cover ship and plane leasing.

The leasing business may sooth China's gasping demand for ships and planes as the country's economy continues to grow quickly.

Over the past 10 years, China's demand for planes has doubled while about 90 percent of the financing for plane leases on the mainland are conducted by foreign companies.

Last week, the Industrial and Commercial Bank of China announced that the China Banking Regulatory Commission has approved it to set up a financial leasing company in Tianjin Municipality.

The company, solely invested by the biggest lender in China, will register in Binhai District in Tianjin with a capital of two billion yuan.

The commission is still considering applications from Minsheng Bank and China Merchants Bank to enter the leasing business, according to previous media reports.