Kingsway Asset Finance, a UK asset finance firm, has recently secured £3m in funding from UK banking group RBS, shortly following the company’s victory against Barclays Capital during an FCA investigation into mis-selling of interest rate hedging products (IHRPs).
Kingsway had previously secured £5m from Lombard and £4m from NatWest, when the latter decided to add a further £3m last week.
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According to Adrian Anthon, founder and managing director of Kingsway Asset Finance, the company holds active funding arrangements with a total of eight banks and the latest agreement brings the company’s total current facilities to £24m.
In addition to the funding increase, the company was recently awarded a rumoured £3m settlement by Barclays Capital.
Kingsway Group was mis-sold an interest rate swap seven years ago, leading to costs which crippled the business’s expansion until an investigation ordered by the FCA in 2012 closed in favour of the company a few weeks ago, ordering the bank to repay the sum.
"We had to put our expansion plans on hold a few years ago because of an issue with Barclays Capital" says Anthon.
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By GlobalData"Barclays Capital sold another Kingsway Group company an interest rate swap back in 2007 and two years ago the financial conduct authority stepped into the arena stating that many interest rate swaps had been mis-sold and the FCA initiated a review and redress scheme, in which all the major UK banks had to take part."
The order proved a lifeline to Kingsway. "Because of that swap miss-selling and of how much it was costing Kingsway, we haven’t been able to expand," explains Anthon: "But a few weeks ago the review was concluded and Barclays Capital had to make a very large redress payment to Kingsway."
Anthon adds: "The consequence of the receipt of that figure meant that the Kingsway group is now in a position to expand and offer more finance to UK SMEs in association with funding partners such as NatWest, Lombard and some others."
In addition, the group is fresh from negotiating a £2m facility with asset management group Investec last week and will announce a second significant partnership over the coming two weeks.
"It’s very positive," says Anthon. "We’ve not been able to grow over the past few years, largely because of this issue with Barclays Capital which the FCA has forced them to resolve.
"Now that has occurred it puts us in a strong position to negotiate a number of increased and new facilities with various UK funding organisations and the eventual outcome of that will be that Kingsway will be able to do more lending into the SME business community."
Kingsway Asset Finance provides bespoke leasing packages to its customers, primarily SMEs, with services centred on the provision of equipment leasing facilities for new machinery acquisition, IT systems improvement and office refurbishments.
Describing the UK leasing environment, Anthon is confident: "I believe there is a shortage of overall capacity for the SME market," he says.
"It’s gradually being addressed, in my opinion, but I still think at this point in time there is a shortage. So every time somebody like us can increase the availability of funding into the SME market it’s got to be helpful."
