The heads of captive finance firms met to discuss the future relevance of leasing to their industry, and whether the word ‘leasing’ wrongly categories their businesses, at the autumn meeting of the Captives Forum.
Hosted by John Deere Bank at it Luxembourg headquarters, the discussion was led by Derek Soper who, in his capacity as chairman of the Leasing Foundation as well as advisor to the Forum, gave a presentation on the Foundation’s ‘Redefining the Leasing Industry’ research project.
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Soper told attendees at the trade body’s meeting there is a view among some in the industry the word ‘leasing’ no longer covers the diverse nature of products being offered by captive finance firms and may wrongly categorise their businesses.
Soper contrasted this with the position of the bank-owned leasing sector which he said increasingly considered leasing "just yet another finance product" whereas manufacturers are developing further products and services as part of a ‘leasing’ package.
Leasing ‘discredited’
The presentation started a debate on the growing extent to which services and support often exceeded equipment costs, the increasing trend for end users to outsource to managed services facilities and the trend for the manufacturer finance arms to manage account administration and collection for other parts of the business.
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By GlobalDataThis in turn led the Captive Forum members to consider whether expanding the definition of ‘leasing’ to include wider services "may not be favourable" to a manufacturer’s business because the term was "discredited," had negative connotations and also risked service agreements being "designated something that they are not."
The meeting included a presentation from Stephen Bodmann, director of Wholesale Credit at John Deere Bank, on the challenges of supporting John Deere through the distributor and dealer channels and maintaining banking industry standards and practices.
Annette Jung of Philips Healthcare Global Customer Finance spoke about Philips’ development of its healthcare and lighting businesses and how it combined different service contracts and finance agreements before leading a discussion about the balance between retaining risk and obtaining external wholesale finance.
Dr Petr Zemcik, director of European Economics at Moody’s Analytics, then briefed members on recent positive developments in the global economy including the latest GDP figures and the outlook from the latest PMI.
