European equipment leasing market, Leasing Life spoke to
lessors in the Nordics, the CEE, the UK and elsewhere.
Jason T Hesse reports.
Syscap
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I
n
the UK, independent IT finance provider Syscap has followed the
economy closely and has tightened its lending criteria. Syscap’s
CEO, Philip White, believes that by doing this it has largely
protected itself from the downturn.
Syscap’s customers are divided equally between the public
sector, the professions arena and the commercial sector. According
to White, the demand for finance has been “pretty consistent” in
the public sector; and even “above average” in certain areas, such
as Syscap’s laptop scheme for schools.
The commercial sector, however, is where Syscap has been hardest
hit, White added: “Clearly, this sector has been affected the most.
There has been a marked downturn in people’s investment in IT,
which has had a knock-on effect on our core market – just look at
HP and Microsystems cutting jobs.”
Earlier this year, Syscap also made 15 percent of its full-time
workforce redundant.
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By GlobalDataLooking forward, White said that he believes the economy will
enter “a period of greater predictability, or less volatility.”
BNP Paribas Lease Group
In Eastern Europe, positive effects from the credit crunch have
been felt. According to Thierry Veillet-Lavalée, who is responsible
for BNP Paribas Lease Group’s Central European operations, tighter
credit restrictions imposed by banks have led businesses to use
leasing instead.
The company believes the Russian market has real potential and
is in the process of setting up a local Russian subsidiary.
However, because of the economic turmoil, the French lessor has
temporarily frozen operations there.
Veillet-Lavalée remains optimistic, hoping that his business can
set up in Russia by winter: “We’ve already missed the 2009
agricultural season, but I am sure we will be successful. The
Russian market offers a real opportunity for leasing companies.
Once you head out of St Petersburg and Moscow, margins are very
high – between 10 and 15 percent.”
In Hungary, the company has been isolated from the credit crunch
thanks to government subsidies that were paid to farmers and the
agricultural industry this year.
The subsidies have encouraged investment, which in turn has
benefited BNP Paribas Lease Group as farmers lease new equipment.
BNP Paribas Lease Group has also entered the market in Ukraine this
year and, according to Veillet-Lavalée, it has been a success in
spite of the economic downturn.
“We have been working in US dollars, which has given us an
important competitive advantage,” he explained. “Good funding
conditions have given us access to customers who wouldn’t normally
have used leasing.”
However, Veillet-Lavalée expects repayment difficulties because
of credit restriction policies put in place by local banks, which
are suffering from the turmoil.
SEB Structured Asset Finance
The Nordics, too, are seeing a knock-on effect from the economic
crisis. SEB Structured Asset Finance, the top provider within the
Scandinavian receivables financing market, explained that as a
result of the credit squeeze, new areas of interest have emerged in
the syndications market.
Stefan Jonsson, head of global vendor, explained: “We have seen
some requests that we wouldn’t normally see and other areas that
haven’t been as active as we were expecting. While it has become
more difficult for us to lend to other financial institutions, it
has become easier for us to finance non-financial businesses.”
Although the company is eager to expand, the current volatile
credit markets have led SEB to give priority to its current
customers rather than accept new business.
“Before we go on the offensive again, we would like to have a
clear view of the market situation,” Jonsson concluded.
MAN Financial Services
MAN Financial Services (MAN FS), the captive arm of the
transport manufacturer, has also benefited from the credit
crunch.
“Customers who have been dealing with banks or other financial
institutions are finding their credit lines closing or reducing, or
finding it harder to get credit in general, so they are coming back
to us,” explained Elliott Lennick, CEO of MAN Financial Services in
northern Europe.
Lennick believes that leasing is more attractive for businesses
that want to acquire equipment because credit is granted on a
specific asset rather than a credit limit being given for other
purposes by a bank.
“We are seeing customers who we had lost in the past return to
us for finance,” said Lennick.
On the other hand, MAN FS has also seen a slowdown in the
marketplace, with smaller vehicle orders and fewer vehicles to
finance. One positive effect of this, according to Lennick, is that
MAN FS’ market-share is improving. In terms of new business, MAN FS
is looking more closely at each customer – from their cashflows to
the terms on which the vehicle will be supplied.
“It’s a difficult situation,” said Lennick. “Good credit-quality
customers may be suffering through their own customers, which may
reflect on their credit.”
The company has recently seen a “slight increase” in
delinquency, but is “managing this”. Lennick believes that MAN FS
has the advantage of operating in an industry in which customers
need the assets to do business, so it will work closely with the
lessor to rearrange the finance, or look at the terms, if
necessary.
