It has
been two years since a number of bank-owned lessors cut their
partnership ties with brokers.
Now, however, appears to be as good a
time as any to re-forge these relationships.
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The first, and most important, reason
is that brokers are excellent at sourcing new deals from SMEs. And,
as everyone knows, leasing companies are mad keen right now to
increase the amount of business they get from smaller
customers.
This is partly driven by politics. The
parents of many bank-owned lessors have been part nationalised, and
as a result they have a mandate to lend to SMEs.
The second reason is bank-owned
lessors which source SME deals from brokers tend to be
profit-making – take for example lenders such as Close Asset
Finance, Aldermore or ING Lease.
The flipside to all this is that
bank-owned lessors, being risk averse, are generally less willing
to underwrite the sorts of smaller deals most brokers are able to
source.
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By GlobalDataFurthermore, the costs involved in
processing such smaller deals are not sufficiently high enough to
justify the benefits.
Notwithstanding this, signs are
emerging that bank-owned lessors might be experiencing a change of
heart.
This was suggested last month when
several lessors announced that, once the recession lifts, they
expect to be transacting lots of deals around the £20,000 (€28,000)
mark, as opposed to the circa £100,000 average sized deals they are
currently signing.
In preparation for this, a number of
bank-owned lessors have introduced software systems that will
enable them to process smaller deals.
But will they all be turning to
brokers to source this business? Probably not is the answer. The
traditionalists at bank headquarters are hardly likely to warm to a
group of intermediaries who have been typecast by some as the
source of bad business and ill fortune.
Also, with the right systems in place,
many bank-owned lessors are gambling that they will be able to
source low value deals both efficiently and cost effectively.
But it is not just the size of leasing
companies’ deals that are changing.
The asset finance industry is finding
even more reasons for getting into bed with the rest of the
business finance world – take for example UK invoice finance
provider Ultimate Finance Group, which announced last month that it
has set up a new asset finance division, Ultimate Asset
Finance.
Leasing companies are also showing their mettle by not
being afraid to focus a lot of their energies on the renewables
industry, even though the sector’s future remains uncertain and
residuals values are largely undeterminable (see DLL takes
on energy sector , UniCredit dives into
renewables and Leasing could benefit from biogas
revolution).
Brendan Malkin
brendan.malkin@vrlfinancialnews.com
