Basel III rules on the
amount of capital banks must hold to withstand shocks may give
independent leasing companies an opportunity to win new business if
banks scale back their leasing businesses, a leasing expert has
said.
George Tonks, partner at Invigors, an asset finance
consultancy, said that banks may decide to reduce lending in their
asset finance arms and prioritise more high-profile lending such as
unsecured bank loans when preparing for the capital requirements of
Basel III, which is due to introduced by the end of 2012.
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If banks scale back their asset finance
businesses, cash-rich manufacturers and conglomerates such as
Siemens and General Electric, who have leasing arms, could have an
opportunity to fill gaps in the market and increase their market
share.
“If you are independent leasing company, for
example in a manufacturing group, and have access to finance other
than bank loans, then Basel III is potentially good news,” Tonks
said.
Leasing Life contacted a number of the big banks and
leasing providers for comment about Basel III. All declined to
comment, or did not respond to requests for comment.
It is still unclear what impact Basel III will have on different
parts of the asset finance industry.
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By GlobalDataTonks said that although leasing typically
produces a higher return on equity than more risky unsecured bank
loans, asset finance “is not particularly well understood at a
senior level at some banks.”
This could mean that asset finance
businesses become targets for cuts if banks need to ration
some areas of lending in order to build a capital cushion for Basel
III, Tonks said.
Julian Rose, head of asset finance at the
Finance and Leasing Association,
said that tighter regulation of the banking system, such as capital
requirements, should make “lower risk and more cost efficient”
business lending “more important than ever.”
In addition to stricter capital rules, Basel
III proposals will introduce new standards for liquidity and
require banking groups to build up more stable long-term
funding.
