When looking at the structure of
Lloyds Banking Group, it is difficult to see quite how well the
bank’s leasing and asset finance activities are faring amidst the
confusion of the HBOS legacy.
Go deeper with GlobalData
All of LBG’s leasing and asset finance business
is found within the group’s wholesale arm, where it is split
between the Asset Finance and Corporate Markets Divisions.
Asset Finance comprises the group’s contract
hire, motor and consumer finance businesses, including half-merged
fleet businesses Lex and Autolease, Hill Hire, Black Horse and
Personal Finance.
This division posted a pre-tax loss of £459m
for 2009, an 89% increase year-on-year. This was largely due to a
more-than-doubled impairment total of £828m for the year.
According to LBG, this group faces another year
of “consolidation and rationalisation” – in other words, not a
particularly bright future.
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By GlobalDataOver in the wholesale arm’s corporate markets
division, however, a much tidier leasing business is being
built.
Lloyds TSB Commercial Finance (LTSBCF) handles
“vanilla” equipment leasing business – standard agreements on
wheeled assets and movable plant and machinery – with some larger
and more complex deals handled by a separate Corporate Asset
Finance unit within the Wholesale arm.
LTSBCF is primarily an invoice discounting (ID)
provider, however, employing around 1,100 staff throughout the UK,
with only 100 of these dedicated to hire purchase and leasing.
It holds a 22% share of the UK’s ID market,
(according to the Asset Based Finance Association), yet just 3-4%
of the direct asset finance market, according to the FLA.
“We are weighted towards asset based lending,
but our plans are to profitably expand our presence in HP and
leasing over the foreseeable future” explained LTSBCF director
Gordon Ferguson.
As might well be expected, the primary role of
leasing and HP at LTSBCF is to support existing banking group and
commercial finance customers. However, Ferguson says the bank is
also using leasing and hire purchase as a way to bring in new
customers for the group through direct sales, and some broker
business.
LTSBCF is not shying away from innovation,
either – in February, it entered into a joint venture with
livestock auctioneer United Auctions, to provide hire purchase
facilities to help farmers buy cattle more easily.
One option for growing the leasing business at
LTSBCF would be to adopt resources from HBOS’ former business.
After all, in invoice discounting terms, the
HBOS legacy has been put to good use – LTSBCF has integrated large
elements of the old BoS Cashflow Finance business to increase its
scale.
