With refinancing of
medium-sized German lessors drying up, Fred Crawley examines who might be
capable of stepping into the breach.
The withdrawal of HSH Nordbank from
the lease refinancing market at the end of 2008 signalled the start
of a new and barren funding climate for Germany’s independent
lessors.
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The subsequent two financial quarters
have seen numerous pullbacks from other regional banks looking to
reduce their asset bases in the face of public pressure, while the
German leasing association (BDL) has been repeatedly stalled in its
efforts to open up state aid to independents.
Even international banks with leasing
businesses of their own have dropped out of refinancing Germany’s
independent lessors, with CIT, KBC and BNP Paribas all having
virtually deserted refinancing in the last eight months, despite
maintaining their own local leasing businesses.
Now, as the BDL prepares to survey its
members on the subject of refinancing, the answers given by its
100-plus independent members will have great significance for the
health of German leasing.
Regional shipping bank HSH had been
refinancing around €3 billion of lease business annually, providing
liquidity for hundreds of finance companies. But with pressure
growing from its owners – the states of Hamburg and
Schleswig-Holstein – its asset base had to be cut, and refinancing
for leasing companies was one of the first things to go.
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By GlobalDataAt around the same time, and under
similar pressure, the Sparkasse Köln Bonn, Germany’s largest
communal savings bank, made a similar departure from
refinancing.
Not all the Sparkassen are beating a
retreat, however. The Sparkasse Bremen, for example, has been
notable in increasing its refinancing presence in response to an
emptier market. But for most, lease refinancing has been a luxury
that public ownership has not permitted.
Also, despite a leasing culture in
Germany where many international banks would refinance lease
business alongside funding their own local leasing arms, most
internationals have now restricted liquidity to their own
subsidiaries. Large German banks too, such as Commerzbank and LBBW
(both of which have maintained thair own leasing businesses), are
understood to be drawing back from refinancing other providers.
Against this backdrop, it is unsurprising that Grenkeleasing, one
of Germany’s most active independents, purchased Hamburg-based
private bank Hesse Newman in February
Other independents have found
solutions through international business. IT specialist
CHG-MERIDIAN, for example, has kept up good refinancing links with
Société Générale, due to its work with the French bank’s SG
Equipment Finance subsidiary in other national territories.
Both Grenke and CHG are large
multinationals, however, writing business in the range of hundreds
of millions a year. The worst problems lie for those local-level
independents with business in the region of €30 million-€100
million per annum.
For many of these smaller lessors, the
solution has been to take straightforward loans from banks which
will not provide refinancing. But these credit facilities are
severely limited in comparison to previous arrangements, providing
much less flexibility.
Public aid has proved to be even less
of an option. German public bank KfW, which historically provided
aid to liquidity-starved banks, can currently only aid leasing
companies if they apply through parent banks – a situation of no
use to independent lessors.
The BDL had hoped to open up
applications to KfW from non bank-owned companies this year, but
nothing has happened as yet. The general view from German lessors,
in the resigned words of one source, is that “it would be very
surprising to see anything happen in the next 12 months”.
But there may be some hope to be had
for the rest of 2009 – Dutch bank ING is known to have made
approaches to at least one major independent lessor in June, with
the aim of putting refinancing back on the table.
