Leasing companies that
have stayed the course during the crisis, when looking back at
2010, are likely to be thinking that it could have been worse. The
second half of the year has been peppered with stories about profit
growth and strategies for future expansion.
But the joint EU-IMF bailout of
Ireland, confirmed at €90bn as Leasing Life went to press,
is a sign that the aftershocks of the financial crisis are still
far from over.
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Only in April, Greece had received a
€110bn bail-out from a sovereign debt default.
The truth is that growth is patchy,
and many of the leasing company’s profit gains reflect in part
comparisons against a bad year in 2009. European lessors are
investing in overseas expansion in the hope that new markets will
provide a good proportion of their growth next year.
Already Portugal has warned that it is
in high risk of needing economic help: its economy and by extension
its leasing industry are struggling.
The head of the country’s leasing
association, Portugal Associação Portuguesa de Leasing, was one of
the most depressed of all the leasing industry representatives at
Leaseurope’s annual conference at the end of September.
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By GlobalDataSpain is also thought likely to be in
need of support, having experienced a boom not unlike that in
Ireland during the good years.
In Ireland an upsurge in construction,
particularly house building, was driving much of the growth. With
the cost of mortgages rising and unemployment up, it all had to
end.
The British media have been reporting
on housing projects abandoned mid-construction, although these are
said to be few. British banks have £150bn (€175bn) exposure to
Ireland.
Meanwhile, research by Barclays
Capital in the US has warned that the new Basel III banking rules
will leave the largest US banks short of between $100bn and $150bn
(€73bn and €110bn) in equity capital. It claimed that 90% of the
shortfall is concentrated in the top six banks.
The new rules mean that banks need to
hold capital at 8% of total assets, compared to the 7% minimum set
out in Basel rules in September. The main concern being raised was
about the affect that the rules will have on the cost and
availability of capital.
The Organisation for European Economic
Co-operation is forecasting growth in the eurozone of 1.7% in 2010
and 2% in 2012, signalling a slow recovery, albeit growth is likely
to vary regionally.
What does it all mean for leasing?
New markets are likely to play an
important role, and a focus on asset specialism will continue in a
competitive marketplace. It could also be that restructuring in the
leasing industry is not over yet.
Liz Bury
