GE Capital rolls its three EMEA businesses
into one, Jason T Hesse reveals.
In an attempt to create a
higher-return organisation in spite of the tough economic
environment, GE Capital has rolled its three EMEA businesses –
which include leasing arm GE Capital Solutions, GE Healthcare
Financial Solutions and GE Corporate Financial Services – into one
financial institution within the region.
Go deeper with GlobalData
The new unit has been branded GE Capital EMEA
and is headed by Rich Laxer, formerly the president and CEO of GE
Corporate Financial Services, which does factoring and invoice
discounting.
Although the leadership team will continue to
be spread out, the recently formed GE Capital EMEA will be run by
Laxer out of its Berkeley Square headquarters in London.
Meanwhile, according to internal documents
obtained by Leasing Life, Laxer’s stated goal is for GE Capital
EMEA to grow profitably by 10 percent in 2010.
Multiples of GDP
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“The constituent parts of GE Capital EMEA have
often grown by multiples of national or European GDP in the past
and we see no reason why that will not be achieved again,” the memo
said.
“Our long term strategy is to do business with
our pan-European accounts and large profitable in-country
customers, while developing the Government segment and financing
GE-manufactured or provided products and services.”
However, in France, UK, Germany and Italy the
leasing teams will focus on both pan-European and large national
relationships while in the remaining countries, the focus will be
mainly on pan-European relationships, the internal memo stated.
According to a segment leader at GE, who did
not want to be named, GE Capital is struggling with its asset
finance segment, which is performing poorly due to its withdrawal
from the market in the last quarter of 2008.
“They’ve been unable to pick up the volume –
the volumes are very low for the first quarter, and new business is
very, very low,” the GE insider said.
“The constituent parts of GE Capital EMEA
have often grown by multiples of national or European GDP in the
past and
we see no reason why that will not be
achieved again”
The Commercial Distribution Finance business,
which provides inventory finance, is also seeing “extremely low”
business volumes.
According to a GE spokesperson, volumes are 24
percent down year-on-year.
GE Capital Solutions has been particularly hit
by its residual value exposure on cars throughout Europe.
“It’s been suggested that there is a European
exposure of £90 million (€101 million), which is quite big,” said
the manager.
Desperate to get more for each car it sells,
the car leasing business has thus put all of its energy into
remarketing activities.
But the lessor will need to do more to cut
costs if it is to achieve GE CEO Jeff Immelt’s widely-reported
goals of shaving $2 billion (€1.5 billion) off the business, and a
return to profitability.
One initiative has been a pay freeze for all
UK employees, although another internal memo added that despite the
pay freeze, “bonuses for the 2008 period have been paid in
accordance with relevant bonus plans” within the GE Capital EMEA UK
business.
Consultation process
The business has also been undergoing a
consultation process for several months, in an attempt to reduce
headcount.
“The collective consultation affecting
UK-based pan-European employees is coming to an end, and now there
are individual consultations,” said the manager. “Many have been
involved, mainly people working out of Hounslow and Weybridge.”
These offices house many of the European
operations.
In total, the manager estimated that “between
40 and 100 heads” would leave in the European organisation.
But another of GE’s pressing issues is that it
still has relatively high funding costs, requiring a high rate of
return to cover its cost base.
“A lot of leasing is price-driven, and many
vendors are not just looking for a safe long-term partner, but for
very attractive rates too,” added the GE manager.
“Against the backdrop of a tougher credit
policy, this makes it very difficult for you to win business.”
The questions GE Capital will have to ask
itself are whether there are enough companies and vendors willing
to pay a price premium for its services, and whether there are
enough customers capable of passing its rigorous credit tests.
See page 45 for analysis of GE
Capital y
Digest
Océ sees 60% hike in
second-hand kit
Document management and digital
printer manufacturer Océ has seen a strong growth in demand for
second-hand printing systems.
The Dutch company, which has an exclusive
global financing partnership with De Lage Landen, sold around 5,000
renovated systems in 2008, an increase of some 60 percent on the
approximately 3,000 printers sold in 2007.
Océ estimates that “over 90 percent” of these
refurbished second-hand printers are being financed, rather than
purchased outright. The second-hand printers, typically
three-to-five years old, are fully refurbished and guaranteed by
Océ.
Avaya launches channel offer
Avaya Financial Services (AFS), part
of CIT Group, has launched a new product to boost channel partners’
credit lines and cash flow.
Under the terms of the product, Advanced
Funding Programme, AFS will pay all of Avaya’s accredited
distributors’ upfront costs for the equipment, and will pay channel
partners 50 percent of the installation costs prior to
installation.
The new programme will be available in the UK,
Belgium, the Netherlands, France, Switzerland, Germany, Italy and
Spain – and will “significantly increase cash flow for both
distributors and business partners,” according to the company.
PCFG agrees funding terms
UK financier Private and Commercial
Finance Group (PCFG) has announced that with the exception of the
Royal Bank of Scotland, it had agreed terms with all of its funding
banks for the next year, albeit with increased margins.
“Discussions with RBS have been protracted,
but we hope to have achieved a resolution in the next few weeks,”
said CEO Scott Maybury. Results for the year ending March 31, which
are expected in June, will be “in line with market expectations”,
Maybury added.
LeasePlan opens in Mexico
European car lessor LeasePlan has
officially started leasing activities in Mexico.
Mexico represents a “promising new market”,
the company, which already operates in 29 other countries,
said.
LeasePlan CEO Vahid Daemi highlighted: “Since
2007, operational leasing in Mexico has become more favourable from
a tax perspective and we believe that mainly due to this, the fleet
management market in Mexico will grow exponentially in the near
future.”
Roscos rebuked by CC
Britain’s Roscos has been told by
the Competition Commission (CC) to provide more information when
negotiating lease rentals.
In its final report on the market for leasing
rolling stock, the CC said Roscos must give “a set list of
information” to train operating companies in order to give them
better “ability to negotiate more effectively”.
As well as recommending that franchises should
be lengthened to 15 years “or more”, the CC also now requires that
Roscos offer different terms in their lease contracts, to help
promote more competition.
Cisco and UniCredit team-up
Cisco Capital and UniCredit Leasing
have joined forces to launch the Cisco EasyLease financing
programme in Romania.
Cisco EasyLease is designed to help Romanian
SMEs acquire networking technology through floating-rate finance
leases, for equipment worth up to €200,000.
The programme will be available exclusively
through Cisco certified partners.
