With the recession
thinning the number of low-risk deals available in Europe, Fred
Crawley reports on how lessors are relishing the prospect of fresh
business.
For leasing subsidiaries sitting
alongside other commercial finance units inside a larger family of
businesses, a shrewd go-to-market strategy can lead to leveraging
other divisions’ connections to sell more asset finance, while also
using leasing relationships as a platform to sell other financial
products.
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Cross-selling is not a new concept,
but 2009 seems to be seeing a marked trend for many financial
services groups to integrate asset finance sales into a broader
strategy aimed at selling a ‘solution’ rather than products.
Close Brothers, for example, began to
merge its invoice discounting and asset finance businesses into a
single legal entity on 1 August, under the banner of Close
Commercial Finance. In time, Close Commercial Finance will also
provide ancillary services such as foreign exchange through the
support of embedded expert staff. The move will involve a
comprehensive training programme for staff on both sides of the
integration, aimed at promoting recognition of customers’ needs for
invoice discounting in an asset finance relationship, and vice
versa.
The integration is also expected to
increase the introduction of asset finance through professional
services. Currently, invoice discounting business is regularly
sourced through contact from SME accountants, and Mike Barley,
director of Close Brothers, hopes that by offering asset finance
through the same organisation, that particular channel will
widen.
UK banks
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By GlobalDataThe UK’s largest banks are also
in on the trend. HSBC Equipment Finance (HSBC EF) already does 75
percent of its business with HSBC’s banking customers, and has
embraced sales integration, not just as a mechanism for efficiency,
but as a central part of a plan for rapid growth. At the core of
HSBC EF’s expansion through the sales base of its parent is its
structured finance team, which offers much more holistic products
than just an isolated lease or contract hire deal.
Barclays Asset & Sales Finance
(BA&SF), even more than HSBC EF perhaps, has set its sights on
integration into a wider commercial finance operation.
One of the fastest growing areas of
Barclays Commercial Bank, BA&SF now operates effectively as
“one team” with the rest of Barclays Commercial Bank, said asset
finance head Alex Brown. Within BA&SF, he explained, there is
no incentivisation linked to the sale of any particular product nor
are there any product-specific targets. In addition, Brown said,
the integration has proved “critical to continued safe lending” by
collating risk information on customers.
“We have achieved a ‘one risk’ view of
the customer, giving us a new level of transparency and support,”
he said.
‘Highly specialised
areas’
Prue Heron, director of
recruitment company Commercial Finance People, said that
integrating asset finance into a wider commercial finance offering
avoids potential missed opportunities as well as offering economies
of scale through staffing consolidation.
However, she warned, consolidation is
not without its drawbacks: “The knowledge and skills required for
the identification of opportunities for the sale of asset finance,
invoice finance or commercial banking are as different as the
training and qualifications required for each of these sectors.
They are all highly specialist areas.”
If a healthier economy presents itself
next year, these lessors will have a chance to show how their
adaptations to a sparse sales outlook perform in a less demanding
market.
