HSBC Equipment Finance may be concentrating on its
parent’s expansion in the UK, but as its IT systems are built up to
take on more business with more efficiency, Fred Crawley suspects that this ‘odd
one out’ among high street lessors will soon start to punch above
its well-capitalised weight.
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HSBC Equipment Finance’s (HSBCEF) IT
system, which is being developed in conjunction with SunGard and
Northern Arch, is due to go live this month, just one month behind
the schedule that was projected in mid-2009. As any lessor that has
experienced a systems upgrade on this scale would agree, that is
not bad going.
When the new system in place, its development team – which
has drawn staff from both the front and back ends of the business –
will return to their usual posts in order to start increasing the
amount of deals being transacted.
For the immediate future, this will mean
primarily banking group business. While in some specialist areas –
such as its print finance division – HSBCEF takes on a more even
mix of HSBC and non-HSBC customers, its overall business is
weighted 75 percent towards existing bank relationships.
This was a strategy that HSBCEF followed quite
some time before the credit crunch led Barclays, RBS and Lloyds to
take a similar customer-focused approach to their leasing
divisions.
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By GlobalDataIn many cases, however, asset finance is the
“wedge product” that brings new customers into the HSBC group. For
example, HSBCEF’s ability to offer IT finance in conjunction with
Finnish asset lifecycle specialist
3 Step IT has helped it win new customers in the highly-targeted
professions sector.
Later down the line, the platform’s second
phase will allow HSBCEF more options in terms of distribution
channels. Exactly what the eventual channel strategy will be is
still under wraps, however.
HSBCEF has not made any new hires in the last
quarter, and may not need to for some time, as the front-end
resources formerly tied up in the IT rollout are returned to
customer-facing duties.
“In any case, the business has always had an
ethos of maximising productivity per head of staff,” said managing
director Richard Carter. “The new system will allow much more
efficiency in that regard, and much more flexibility in terms of
the products and lease structures we can offer.”
Investing in key areas
It is thought that the business may
soon be looking to reorganise its sales leadership capacity, since
while Carter has run the HSBC-EF front end smoothly since last
April, his previous experience, and main workload for the past
year, has been in back office development.
“As things progress, we may look to invest in
certain key areas,” he said, adding that the sales operation – if
not the headcount for the immediate future – is definitely under
development. In the short-term, he said that the reorganisation of
the sales force would be geared towards giving HSBCEF “much greater
presence and visibility within the bank”.
One factor helping in this objective will be
the six-person structured asset finance (SAF) unit, led by Bill
Cuff, which targets deals in the £5 million (€5.7 million) to £50
million range mostly for banking group customers. Working with law
firms such as Addleshaw Goddard and Wragge & Co, the SF team
has had what Cuff calls a “fantastic” 2009, with particular
activity in the field of water treatment equipment and large fleet
deals.
Cuff says that SAF has been looking at the
possibility of more international work, but that this will depend
upon what happens elsewhere in the HSBC group. For now, he says,
his team will focus on the potential benefits of cross-border deals
for HSBC clients in the UK. Public sector work, as part of a larger
focus on managed services customers, is also being looked at, he
said.
However, the story of asset finance and
leasing at HSBC has not entirely been one of growth. Last month,
the group announced it was to wind down its vehicle finance arm,
HSBC Vehicle Finance, migrating existing customers over to Lex
Autolease, the country’s largest fleet company.
Lex had been responsible for the
administration of HSBC Vehicle Finance’s (HSBCVF) fleet, numbering
40,000 vehicles as of last year, since 2005. Lex had dealt with
payment processing as well as vehicle purchase and disposal, while
HSBCVF retained responsibility for its own sales and marketing.
Cars and light commercial vehicles, the
mainstay of HSBCVF’s business, are not sectors that HSBCEF is
currently aiming to grow its business in. Therefore, while it is
possible that the closure of HSBCVF will send more motor and LCV
enquiries towards HSBCEF’s doors, it is less likely they will all
be taken on.
Going by its young IT system, relatively low
front-end staffing balance and robust liquidity, HSBCEF is likely
to push for business at the higher end of the ticket scale long
before it grows its book with higher volume, lower value assets.
Nevertheless, with its parent back willing to invest in further
expansion, virtually all options seem open.
