The specialist savings and lending bank came to market in April 2011 after being bought by RBS Equity Finance, which allowed the business to grow. Subsequently, Shawbrook was able to buy further lending facilities, enabling the bank to develop towards its current model and branding launch in October last year.

Two months later, Shawbrook revealed a short-term lending proposition as a complementary addition to its successful mid-term offering, establishing a strong market position and diversifying product range.

We caught up with Stephen Johnson, Shawbrook Bank’s New Business Director, who told us more about what Shawbrook has to offer and what’s to come in 2012.

Stephen said, “We want to build on this strong start, and our recent move into short-term lending is an exciting move for the bank. We have had a strong response and look forward to becoming a significant lender into the short-term loan sector.”

Explaining a little more about the new product range, Stephen added: “There is a lot of uncertainty within the wider economy at the moment. Our short-term products are specifically designed for experienced property investors and although the climate is changeable, there are strong buying opportunities out there and therefore we believe there will be a significant amount of demand to be satisfied.”

Despite having been launched just before Christmas, Stephen told us that Shawbrook has already made a number of formal offers to clients who fit the experienced property professional requirement.

He continued, “Most of our prospective clients are looking to finance the purchase of residential and mixed-use investment properties with an established rental income. We have also had enquires for refurbishments on prime property from those looking to increase rental return over the medium term”.

Looking ahead to the rest of the year, Shawbrook looks set to continue growing. Stephen said: “Since introducing our extended range of commercial lending products, our aim for 2012 is to provide £250 million of lending to the market.”

“We are keen to develop our lending proposition, and are particularly focused on identifying complementary markets to our term lending. We are enthusiastic about the opportunities we believe exist in 2012 for a specialist bank with no legacy issues.”

However, Stephen noted that the new offering will remain as an extension of Shawbrook’s existing product range: “The majority of our funds will still be lent in the mid-term market which will be about 70 per cent of our loan book. The remaining 30 per cent will be in the short-term market where we expect to expand our business in the coming year.”

With such triumphs leading the way into the New Year, 2012 is set to be prosperous for the entire short-term lending arena with continually increasing confidence in a steadily expanding market.

Article contributed by Bridging and Commercial

GE Capital Commercial Lending and Leasing (CLL), the segment which includes global equipment finance operations, posted $2.7bn in profits for the 12 months to 31 December 2011, representing a 75% increase on the figure for 2010.

GE Capital’s profit for the fourth quarter was $1.6bn, an 11% increase from the previous three months. GE Capital CLL increased profit 13% in the fourth quarter, recording $777m in earnings compared to $688bn in the three months to 30 September 2011.

GE as a whole posted profits of $14.8bn, up 20% from $12.3bn in 2010.

Jeff Immelt, chairman and chief executive of GE said: “GE Capital, like our industrial businesses, is stronger and competitively positioned to win.”

He said he expects GE Capital to experience double digit profit growth in 2012 while continuing to shrink its balance sheet and strengthen its capital and liquidity positions.

“We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth market footprint and taking important steps to strengthen risk management. GE Capital is safe and secure and rebounding sharply. We are restructuring our businesses in Europe to reflect market conditions,” he said.

Article contributed by: Leasing Life

As it released the figures, which go back to 2007, the Cooperative Group’s banking division set a target to double the funding to £1bn by 2013, as part of the wider group’s corporate responsibility strategy, called Ethical Plan.

The Co-operative Bank, which prides itself as an ethical lender, has funded 108 renewable energy projects over the period with a capital value of £1m to £25m.

Projects are typically taken on by smaller developers, community groups and landowners as a means to diversify income, according to a statement from the bank released with the figures.

The projects funded include onshore wind, hydro, biomass and combined heat and power systems, and the bank has a renewable energy team to deal with planning permission and grid connection on behalf of clients.

Richard Wilcox, head of social banking at The Co-operative, said: “At a time when many communities are fighting for survival from the wider economic challenges, small to medium renewable energy schemes provide an opportunity for communities to become sustainable, creating local jobs and diversifying local economies.”

Renewable energy projects in the UK currently receive around £1.4bn a year in government support through the Renewables Obligation Certificates (ROC) scheme.

However, a review of the scheme has been delayed, which could stall renewable energy investment, Wilcox warned.

“We welcome the Government’s commitment to renewable energy investment which has helped to provide an enabling arena for our rapid growth in renewable investment,” he said.

“However, there is a real danger that this could grind to a halt if the review of ROCs and pending review of feed-in tariffs are not completed quickly and with a view to nurturing our fledgling environmental industries.”

Article contributed by: Leasing Life

With banks constantly missing lending targets, business owners are looking into alternative sources of finance to complement any existing banking arrangements.

At present the government’s attempts to push for banks to lend more under Project Merlin and to effectively distribute the liquidity injected by the treasury have disappointed in providing adequate finance for small and medium-sized enterprises (SMEs).

Nevertheless it is not necessarily productive to simply blame the banks. Fresh uncertainty over both the US economy and Eurozone’s abilities to tackle large deficits and a growing sovereign debt crisis has affected bank performance. Combined with the number of debt instruments on commercial banks’ balance sheets and the impending requirement under the Basel III agreement for banks to raise their capital reserves by between 9 and 10 per cent, some banks simply do not have the capacity to lend any more at present.

With traditional sources of finance more restricted, private high net worth individuals, who are currently achieving no return from deposits in banks, and institutional investors who are seeking returns on their capital can act as a complementary source of finance.

MarketInvoice effectively taps into these very significant pools of capital to channel non-bank funds to small and medium-sized companies.

Every year, UK companies take advantage of invoice financing on over £220Bn of commercial invoices through arrangements with banks and factoring companies.

At any time, £13bn worth is outstanding. At MarketInvoice we have trading statistics that show FTSE 250 companies (high street and household brands) paying SMEs as late as 90 to 120 days. Already under strain due to reduced bank lending, these SMEs are facing serious cash flow difficulties.

Traditional factoring and invoice finance can be ill-suited to these companies as they often require an entire sales ledger flowing through a factor. In addition, factors necessitate stringent criteria and often exclude certain types of invoice, such as export invoices, while typically requiring ongoing service fees and collateral requirements such as personal guarantees or all asset debentures.

MarketInvoice allows SMEs to get cash upfront on their invoices by auctioning them on an online marketplace. High net worth individuals and institutional investors place bids and advance cash to these companies in exchange for a small discount fee, which is driven down through a competitive auction process.

With no ongoing service fees, no requirement for collateral such as personal guarantees and the freedom to choose when and how often they desire to auction an invoice, it has seen quick take up as a credible alternative to traditional capital sources.

Today’s funding landscape confirms that it is unsustainable to rely solely on banks to provide the capital to fund small and medium-sized companies. MarketInvoice can act as a complement to traditional bank facilities while adding much needed competition to the finance sector.

With investors increasingly looking for alternative asset classes to invest in, it is time to push for greater innovation in financial services. Rather than relying on Government to legislate, UK entrepreneurs are trying to disrupt and level the playing field for access to capital”

Article contributed by MarketInvoice

This growth comes on the back of continued growth in advances over the past five quarters and shows that UK and Irish firms are increasingly opting for this type of finance over other forms of lending. The latest figures also show invoice finance clients are again choosing not to access all of the funds available to them. Total available funds this quarter were £22.2bn, with £6.5bn of finance available but not drawn.

Of the total funding provided by members, SMEs received almost 40%, or just over £4bn this quarter.  A decreasing gap in the level of advances between SMEs and businesses with turnover above £100m suggests a growing confidence amongst SMEs as they get comfortable with increasing debt levels. This is supported by total clients’ sales growing 14% over the past year to reach £59bn.

The latest ABFA economic report also shows that export and import factoring have both grown substantially, enjoying a year-on-year rise in client sales of 48% and 47% respectively. This leap in demand for import and export factoring indicates that while the UK market remains sluggish, clients are looking to customers outside of the UK to buy their products, and are choosing this type of finance to help facilitate overseas trade.

Credit protection payments by ABFA members to their clients have also continued to decline, dropping by 27% over the last year to total £4.9m, consistent with the UK-wide trend of lower default rates on loans and a stable rate of write offs. Together with the shortening average debtor day numbers both these factors reflect one of the key product benefits of asset based finance, namely introducing firmer debtor disciplines.

Kate Sharp, chief executive of the Asset Based Finance Association, said: “The figures in our new economic report indicate growing business confidence amongst invoice finance clients, both SMEs and larger firms. This contrasts markedly with the general negative sentiment concerning the state of the wider UK economy and a general contraction in the stock of lending. Firms using invoice finance are seeing rising sales and are continuing to have access to an ample supply of finance. With total client numbers rising by 244 in the last quarter, the invoice finance sector is providing much needed finance to many UK and Irish businesses and is, and will continue to be, a significant contributor to supporting the wider economic recovery.”

Article contributed by the ABFA

• In the six months to July, 67% of respondents saw an increase in the time it took customers to pay invoices
• Businesses typically take a worrying 22 days beyond agreed credit terms to pay invoices
• 84% are currently having to spend more time chasing their customers for payment than they were at the start of the year

According to the survey, two-thirds of business owners and finance directors have witnessed an increase in the time it takes customers to pay their invoices over the six months to July (67%), while only 5% have seen the situation improve. Meanwhile, UK businesses have reported that they are now waiting an average of 22 days beyond agreed credit terms to be paid by their customers.

The payment gap is widest for small businesses with a turnover of less than £500,000 – those who can least afford it. Despite extending the lowest credit terms – typically 28 days compared to 33 days among companies with turnover of more than £3m – customers took on average of 51 days to pay. This gives SMEs a typical payment gap of 24 days, more than six days longer than their larger counterparts and creating major cash flow problems during already difficult trading conditions.

More than two in five of those questioned claimed that privately owned / limited businesses were the prime culprits for late payment (43%), with anecdotal evidence that larger companies take advantage of smaller firms by enforcing their own payment terms and insisting that they override the SMEs’ terms and conditions.

Late payment on this scale is simply not sustainable and can send damaging shock waves along the supply chain. Significantly, the most common excuse for late payment was that customers are ‘waiting to be paid by their own customers’, as reported by 33%. This cycle is hard to break and can have detrimental effects on businesses whose cash reserves may not be sufficient to withstand the strains of late payment which, as a worst case scenario, can even trigger business failure.

Alex Hilton-Baird, Managing Director of Hilton-Baird Collection Services, said: “There is no doubt that the current economic climate is tough and businesses of all sizes are feeling the pinch. Our research proves what a major issue late payment is for the nation’s SMEs, with smaller businesses particularly likely to suffer bad debt. However, SMEs are not doing everything they can to help themselves in these turbulent times.

“Whilst implementing credit checks, suspending credit facilities and charging late payment interest were popular amongst respondents, our research has revealed that UK businesses appear apprehensive about using the specialist resource of a debt collection agency, with only 17% outsourcing all or part of their credit control during the first half of the year.”

Another impact of late payment is that 84% of businesses had to spend more time chasing their customers for payment over the same period. Naturally, this diverts valuable resource from the essential job of managing the business to chase payment and seek growth, as evidenced by more than one in ten even having to turn away new business (11%). Worryingly, it looks as though this issue is not going to disappear fast, as nearly a quarter admitted that they did not expect to implement any further credit management strategies in the next six months (24%).

Alex continued: “Outsourcing can be extremely beneficial and an effective method of recovering debts. We would therefore encourage SMEs to consider all of their options to overcome late payment, and not be afraid to consider outsourcing – particularly given its proven benefits.”

Article contributed by Hilton-Baird Collection Services

The UK and wider market

The asset based finance sector is very well established in the UK and has had many years of uninterrupted growth with the exception of 2009 when most key indicators fell. Nevertheless, 2010 saw a return to growth in most of the key areas, including a record client turnover of £212.3bn. This return to record highs in client turnover was achieved partly as a result of the modest growth in the economy but also the continued switch away from traditional bank lending.

While 2009 saw a severe dip in the UK’s economy, since then the picture has become a bit more positive with growth in both the factoring and invoice discounting industries, plus the wider economy. Admittedly, the UK’s growth has been extremely limited, but this contrasts sharply with that of the asset based finance industry which has almost returned to pre-recession levels of lending and activity.

Export finance is another area within the industry that is becoming increasingly popular. Client sales in this area have increased by 39% to £3.5bn over the past year. This growth has most likely been assisted by the sluggish UK economy as many businesses look to exports as a way of exploiting the growth opportunities abroad, a trend that’s set to continue.

However, faster economic growth is likely to be hard to achieve with the huge cuts in public expenditure that the present coalition government believes is necessary to bring down the budget deficit. The flow of finance to personal and business borrowers also remains well below its peak, although Project Merlin, the agreement between government and the major banks to increase lending to SMEs, opens up opportunities for asset based finance to assist the banks in meeting their agreed lending quotas.

So far this year, the Asset Based Finance Association (ABFA) has released two sets of quarterly figures, both showing a return to strong growth within the industry. The first of these was in March which showed total lending growing by 8% year-on-year, and with advances from members at the end of 2010 totalling £14.9bn.

The very latest figures from June 2011 show this growth has continued, and indeed is actually outperforming all other types of business lending. Total advances from members last quarter has seen growth of 9% year-on-year (see chart 1), whereas wider bank lending actually contracted by 2.5% in the same period. The figures also show turnover growth of 15% year-on-year, with total client sales in the quarter of £55.8bn (see chart 2).

These latest statistics show just how successful the industry is; with very positive sales growth for companies using invoice finance, plus there is no shortage of available funds. Compared to other major forms of business lending, asset based finance has grown the most, as both clients and lenders realise its inherent strengths in these unpredictable economic times.

The ABFA has also for the first time calculated that clients actually have sufficient funds in place and are now actively not choosing to access all the finance available to them. From the most recent figures in June, total funding available was £21.1bn yet only £14.8bn was utilised by clients, meaning there were £6.3bn of funds still available.

The international market

Growth within the asset based finance sector has not been confined to the UK; it is also continuing to grow internationally. In Europe the industry saw 19% growth in 2009-2010, North and South America saw 31% growth and Asia saw an incredible 69% growth over the same period. This rapid international growth demonstrates the global embryonic nature of the industry and its products. As the benefits of products such as factoring and invoice discounting continue to be acknowledged and become more established across the globe, this growth should begin to plateau as the products reach their natural market penetration.

This strong growth does however contradict the international economic climate. With much of Europe still in recession during 2009-2010 the asset based finance industry still managed to grow a defiant 19%. The challenging financial climate has actually assisted in increasing the popularity and awareness of asset based finance. With many countries struggling to stabilise their economies, they have increasingly turned to asset based finance products as a lower risk business lending alternative. Furthermore, traditional forms of funding have been drying up, but firms still need working capital to fund and grow their businesses, and asset based financiers have often been able to bridge this gap in the market.

As more and more markets become aware of the benefits of asset based finance, we will begin to see increased visibility of the products which in turn should result in the continued global growth within the industry.

In summary

Right now the international invoice finance and factoring industry is uniquely placed to assist small businesses with cash flow requirements. The banks are clearly struggling to reconcile a number of conflicting issues. The legacy of the recession is a dampened risk appetite, and rightly so, some lessons need to be learned. This is coupled with a legislative requirement for banks to hold greater levels of capital but at the same time they are being encouraged by governments to lend more. Asset based finance has proved to be a very capital efficient and low risk product.

By using asset based finance methodologies, greater levels of finance can be made available to good businesses across the globe that may have been hampered by a lack of liquidity.  The above evidence suggests that asset based finance will be a key product for the international economy and its recovery. Plus, with firms using invoice finance seeing their sales rise, even in the face of a sluggish economy, it’s clear that these products are the way forward for growing businesses across the globe.

Contributed by ABFA

Latest data signalled higher levels of availability for permanent workers in June. Nevertheless, panellists continued to indicate skill shortages for a range of specific job types.

The availability of candidates to fill permanent job roles increased for a fifth consecutive month in June. Although quickening to the fastest since February, the rate of growth remained only modest.

Copies of the full report are available on annual subscription from Markit. For subscription details please contact: economics@markit.com Tel: +44 1491 461000

Report on Jobs contributed by Markit

The award ceremony, held in the Summer Pavilion at the Tower of London this year, recognises the best and brightest of the bridging world.

British bank Aldemore, which has grown substantially in the last few years, is backed by AnaCap Financial Partners LLP and Morgan Stanley Alternative Investment Partners.

Managing Director of Aldemore Commercial Mortgages, Rob Lankey said: “During 2010 Aldemore more than doubled the amount it lent to small and medium sized businesses.

“Across all asset groups, the bank had outstanding loans worth £410.2 million at the end of the year, compared to £198.6 million at the end of 2009. By the end of the first quarter 2011, that number has jumped to £468.7 million; an increase of 14% in just three months.”

Philip Monks, Aldemore’s CEO, also commented on the company’s growth: “The relative ease at which we are beating our growth forecasts is proof that we have established a very successful and efficient business banking platform. Small businesses clearly like the service that we are providing them with,” he said.

Aldemore is especially pleased with the win due to the fact that the nomination was made by brokers. Mr Lankey said: “Our formula for success has been to deliver what we’ve always promised from the outset: simple products supported by an easy to understand process; the ability to develop tailored solutions for clients rather than simply saying ‘no’ if cases don’t immediately fit; short lines of communications which include giving brokers access to expertise (even if it’s out of hours and late into the evening) and, perhaps most importantly, fast decisions.”

He added: “Feedback from brokers has ben excellent and they seem to genuinely appreciate that they can access everything they need under one roof at Aldemore.”

Looking to the future, Aldemore hopes to continue its success. “Being voted the Best Commercial Lender twice in a row was fantastic, but it’s our intention to make our service even better during 2011.

“We’re currently midway through the implementation of a major systems upgrade project, which should go live later this year and which I firmly believe will enable us to open up our lead even further,” he said.

Article contributed by Bridging and Commercial

The asset finance businesses of some of Europe’s biggest banks have made a strong start to the year. Some are reporting double-digit growth in the first six months, in stark contrast to struggling retail bank divisions.

The banks’ leasing businesses are confident about their prospects amid growing demand from small businesses and manufacturers, and for technology assets.

Lombard, the asset finance business which is part of Royal Bank of Scotland – which is 84% owned by the UK taxpayer – will lend more than £5bn (€5.7bn) to British businesses over the next year – up 20% from the previous year. In addition to wheeled assets, it will also lend more on less publicised areas like technology and, in particular, plant and machinery.

Alexander Baldock, managing director of Lombard, one of the UK’s biggest asset leasing companies, told Leasing Life it was seeing the strongest growth in manufacturing, the small and medium-sized enterprise (SME) sector, and commercial transport (buses and haulage).

Many companies delayed renewing assets during the recession but have begun to invest again.

“Most businesses are six years into what is usually a four-year replacement cycle [for assets],” Baldock said.

The various types of asset finance, such as taking out an amortisation loan, has helped those companies to start investing again as economic recovery increases demand for goods. The flexibility of asset finance has proved especially attractive to business during a time of credit scarcity, said Baldock.

Other bank leasing subsidiaries have also reported a significant improvement in the market.

Société Générale Equipment Finance (SGEF) increased new loans by 19% during the first quarter of this year. Excluding factoring activities, SGEF’s new business was €1.8bn. In Germany, sales increased by 26%. In France, SGEF signed an agreement with La Banque Postale, the banking subsidiary of the French national postal service, for an equipment leasing partnership.
Euro growth

Specialised Financial Services, which includes the French bank’s consumer finance, equipment finance, operational vehicle leasing and fleet management activities, grew its net banking income by 7% to €728m, compared to the same quarter a year earlier.

Dutch asset financing provider De Lage Landen is confident about its prospects after reporting a net profit of €201m last year, a 79% increase in comparison to 2009. It expects a net profit of around €120m for the first six months of the year, and around €280m for the full year. Achieving these figures would create a record year for De Lage Landen.

Chief executive Ronald Slaats said the company’s optimism is because vendors are selling more and requiring financing. “Our international network is helping us in this regard,” he said. “Vendors want international solutions and want to sell into more than one geography.”

Slaats added that vendors in Asia, for example, want to sell more outside their home market, into countries such as Brazil.

Finland’s Nordea saw a 13% increase in sales for its asset and sales finance arm for the first quarter of the year compared with the same period last year. Nordea Finance chief executive Jukka Salonen said the main increases were seen in the small businesses and consumer segment, notably in consumer credit and car finance. Sales have increased in smaller equipment and yellow goods, he added.

Salonen also said there had been more sales to smaller businesses than larger corporations. He suggested the latter group is more hesitant to invest given uncertainty about the future and because it is able to rely on existing capacity.

Salonen added smaller businesses, especially in the transportation sector, are increasing consumption which is giving more work to companies. “Construction has been another area that is picking up”, he said. “We hope the bigger companies will start their investments in the near future.”

In motor finance, banks’ asset finance businesses have also made a good start to the year.

Arval, part of French bank BNP Paribas, has predicted “strong growth” for 2011, especially in rapidly expanding new markets, such as Brazil, India and Turkey, where growth rates have been over 50%.

Growth in banks’ asset finance arms may help them counter criticism that they are not lending enough to small businesses.

A spokesman for the British government’s Department for Business Innovation and Skills said: “The government is committed to increasing the diversity of finance available to businesses, and encouraging businesses to think carefully about what sort of finance is most suited to them.

“Asset-backed finance is one potentially useful source of finance, particularly for businesses who are looking to update or replace their equipment.

“Solutions such as leasing and hire purchase can help facilitate growth, as they offer finance when new equipment is needed to expand a business.”

Regulation

However, despite good prospects, some bank asset finance businesses could be affected by cuts in certain markets as their parent companies ration their lending.

Barclays, for example, has decided it will no longer provide asset finance to companies with turnover less than £5m a year, saying the need for asset finance among larger companies was not shared by its smaller customers.

A spokeswoman for Barclays said that Barclays Corporate continues to provides asset finance to coporates, including health care, transport and the renewable energy sector.

Barclays continues to offer a “broad range” of finance for SMEs, she added.
Although leasing typically produces a higher return on equity than more risky unsecured bank loans, asset finance “is not particularly well understood at a senior level at some banks”, warned George Tonks, a partner at asset finance consultancy Invigors.

Tonks said banks may decide to reduce lending in their asset finance arms and prioritise more high-profile lending such as unsecured bank loans when preparing for the capital requirements of Basel III, which is due to introduced by the end of 2012.

Article contributed by Leasing Life