Jason T Hesse looks back at the main stories that shaped
the European leasing industry in 2009 and discovers 2010 cannot
come soon enough for many.
January 2009
Go deeper with GlobalData
Following the economic storm of 2008, the year
started off with European lessors taking steps to control the
damage.
BNP Paribas Lease Group announced it was
severing broker links throughout Europe, with the company’s then UK
MD, Mike Dix, attributing the policy to the “significantly higher”
default levels on broker-introduced business.
It also emerged that, in the UK, both GE
Capital Solutions and Siemens Financial Services were restructuring
their businesses, with Siemens closing down its motor contracts and
funfair equipment leasing arms, and GE reorganising the
business.
However, the new year also saw lessors feel
the sting from the Global EPP fraud, where lessors had bought no
less than 579 pieces of equipment for the plastics manufacturer,
when only 71 of these machines actually existed. Despite lessors
claiming £64 million (€71 million) from the administrators, only
£1.5 million was raised at a sale of Global EPP’s assets.
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By GlobalDataFebruary 2009
Businesses continued to restructure in February, with
new management at the helm of Iveco Capital and UniCredit Leasing;
and De Lage Landen cutting its global workforce by 3 percent.
Although members of the German leasing
association reported a funding shortage, elsewhere there were signs
that liquidity had not entirely disappeared from the market.
Indeed, Banca Italease completed an almost
unprecedented €1.38 billion securitisation – the sign of healthy
demand – while GFKL, the German financier, raised €150 million by
selling the Spanish and UK arms of Universal Leasing, one of its
subsidiaries.
Good news also arrived courtesy of Deutsche
Leasing, which reported a 15 percent increase in new business for
2008; and Grenkeleasing, which reported an 18 percent increase in
demand.
March 2009
March was arguably one
of the most difficult months of 2009 for British brokers, with
lessors such as KBC, Lombard and Investec all seriously reassessing
how they do business – if at all – with intermediaries.
While KBC cut broker links entirely, Investec
took steps to tighten its broker policy, including setting maximum
exposure limits of £25,000, creating broker commission ceilings,
and pulling out of a wide range of sectors.
The merger between HBOS and Lloyds TSB was
also on everyone’s lips, with the announcement that the banks’
combined leasing arms would be led by former Lloyds directors David
Oldfield (for the leasing business) and Nigel Stead (for the fleet
finance business), while Lindsay Town and Jon Walden would both
step down and leave the business.
Sale-and-leaseback transactions started to
generate significant interest in March, with UK lessors such as
State Securities and Lloyds TSB Autolease reporting “significant
demand” and Lombard Vehicle Management reporting a 50 percent rise
in sale-and-leaseback volumes.
April 2009
With entrepreneur Pelham Olive appointing a “dream
team” of lessors – including ex-Syscap’s Lord Mitchell and Sean
Williams, ex-BPLG’s Mike Dix, and ex-Asset Advantage’s Jonathan
Eddy – for a new energy project finance business, interest in the
‘green’ energy sector continued to grow.
Indeed, while Crédit Agricole Leasing was
involved in the financing of a €200 million photovoltaic
installation in France, Deutsche Bank completed a €70 million
long-term financing deal for four photovoltaic power parks in
Mallorca, Spain.
Leasing Life started to investigate
GP-Ads and Global Telecoms & Technology, and how a significant
number of companies were refusing to pay millions of pounds for
equipment finance deals which included services promised to them in
earlier agreements, which they had allegedly not received.
This was the start of a long series of
investigations (see page 15).
May 2009
Leasing Life’s second business confidence
survey showed lessors were, for the first time, openly worried
about the future, where only the most adaptable and well-funded
would survive.
In the survey, lessors predicted a continued
fall in business volumes, limited availability of capital, a
squeeze on profits due to increases in bad debt, deeper and wider
cost reductions, and staff cuts.
Although the survey results made for grim
reading, not all lessors were negative about the future. Indeed,
memos from GE Capital, leaked to Leasing Life, showed the
lessor was targeting 10 percent growth in 2010, helped by a much
leaner business which would focus on pan-European accounts and
large profitable in-country customers.
June 2009
The general
mood in June was perhaps more optimistic and forward-looking than
the previous month’s survey had suggested.
An analysis of the leisure finance sector
showed that there were still opportunities for lessors, for example
the opportunity to finance the equipment used in U2’s world
tour.
Sam Geneen, managing director of Five Arrows
Leasing and chairman of Fineline, the group’s company for the media
industry, sounded an optimistic note.
“Not everything is doom and gloom,” Geneen
told Leasing Life. “Today, more than ever, people need the
services of the leisure and entertainment industry to take their
mind off ‘recession stress’.”
The month also saw private equity firms reveal
how they have earmarked tens of millions of pounds for investment
in asset finance, should the right opportunities present
themselves. Surely a welcome source of capital for cash-strapped
lessors?
July 2009
Although July’s
Leasing Life covered the topic of fraud in depth, lease
accounting was also high on the agenda, with the International
Accounting Standards Board’s (IASB) deadline for comments
approaching fast.
Although the actual impact of the IASB’s
accounting proposals remained unclear, any attempts to bring leased
assets onto lessees’ balance sheets were met with scepticism,
sparking widespread concern the changes could harm the leasing
industry.
Separately, an in-depth analysis of the
Austrian and Swiss markets concluded that, although both economies
had been hit hard by the financial crisis, they could be
interesting markets for lessors to move into once the recession
ends.
August 2009
A survey of
European leasing in August also revealed there was hope for the
future.
Despite volumes declining rapidly across
Europe in 2009, not all lessors had suffered equally. Bank-owned
lessors in particular were found to be ‘reasonably positive’ about
their future prospects, and were confident they could grow during
the recession.
Lessors were not asking whether there was
enough business, but whether demand would outstrip supply, the
survey concluded.
August also looked at the state of the block
discounting market in the UK, where some funding lines were being
reduced. With some mid-tier lessors having their block lines cut,
Leasing Life found block discounting would continue to be
a key funding line for UK lessors – even though it may only be
available to an elite few.
September 2009
As CIT’s financial problems deepened, Leasing
Life looked at what was happening to the American lessor’s
vendor relationships. The market was awash with speculation over
who might take over Dell and Microsoft’s vendor finance agreements,
while Toshiba and Avaya confirmed they were sticking to the
troubled lessor for the time being.
Meanwhile, German lessors continued to suffer
as refinancing dried up. The pullout by HSH Nordbank and other
regional banks from the lease refinancing market certainly had a
lasting impact on Germany’s medium-sized lessors, while the German
leasing association, BDL, found itself repeatedly stalled in its
efforts to open up state aid to independents.
September’s issue also looked at the trend for
leasing subsidiaries to adopt cross-selling strategies to grow
their businesses.
The past 12 months marked a trend for many
financial services groups to integrate asset finance sales into a
broader strategy aimed at selling ‘solutions’ rather than just
products, with parents such as Close, HSBC and Barclays all
integrating their financial services businesses.
October 2009
October marked a turning point in the year, with
leasing industry recruiters reporting a definite increase in
business – potentially the sign finance companies were starting to
think about measured growth again?
One recruiter warned not to expect any abrupt
changes in the market, however, and said: “The staffing market will
see much more of a gradual and steady climb, as opposed to any
sudden rocketing in needs.”
Leasing Life’s October issue also
analysed the EU’s European Investment Bank (EIB) lending policy for
lessors. Although UK lessors had, thus far, not shown much interest
in loans to SMEs through the EIB, their large continental
counterparts were doing so in droves.
Over the last year, the EIB has lent hundreds
of millions of euros to the likes of UniCredit Leasing, SG
Equipment Finance, Dexia Lease and MPS Leasing e Factoring –
particularly in southern and eastern Europe – to pass on to SME
customers.
October also marked the final withdrawal of
Lombard and Hitachi Capital from the intermediary market, much to
the dismay of British brokers.
November 2009
Despite October’s buoyancy, during November, evidence
emerged that the percentage of fixed capital investment financed by
leasing had fallen over the past year across many of Europe’s
largest leasing markets. In other words, the popularity of leasing
was waning.
However, the upside was that lessors were
already responding to this by refocusing part of their energies on
new equipment finance products, investigating ways of offering a
wider range of products.
The last quarter of 2009 marked a definite
improvement in liquidity, with securitisations starting to make a
comeback. Greek lessor Piraeus Leasing and captive lessor
Volkswagen Financial Services both completed transactions during
November, of €540 million and €546.5 million respectively, a sign
the market was opening up again.
December 2009
In its end-of-year business confidence survey,
Leasing Life and Invigors research found European lessors
were more positive about the future than they were six months
earlier.
The survey found two thirds of asset finance
professionals anticipating new business volumes to increase over
the next six months, up from 45 percent in April. Of those
predicting growth in 2010, most expected a healthy increase of
between 5 and 20 percent.
The end of the year also continued to mark the
trend of lessors integrating factoring and invoice discounting,
with lessors such as GE Capital, Close Asset Finance, Crédit
Agricole Leasing, and Lloyds TSB Commercial Finance doing so.
Moreover, 55 percent of attendees at
Leaseurope’s annual convention confirmed the trend, accepting they
would need to broaden the scope of their business in order to
satisfy customers.
Many in the industry expect the trend to
continue in 2010.
