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

Commenting on the acquisition, Paul Hird, CEO of Leumi ABL, said: “This is another exciting development for the Leumi ABL team and builds on our very successful growth to date.  We very much look forward to welcoming the Coface clients who will be joining us.”

Phil Woodward, Managing Director of Leumi ABL, added: “This deal continues our growth strategy and follows our purchase two years ago of the Charterhouse Commercial Finance client book.  Since launching Leumi ABL five years ago, we’re proud to have built a strong reputation in the mid tier deal making arena.  We are very pleased to be able to extend our offering to assist the growth of these additional clients, whilst offering the flexibility, speedy decision making and personal approach for which we are known.  As with our existing clients, Leumi ABL’s full asset based lending capability will be available to support these new clients as their business needs evolve.”

Martin Risman, formerly of Coface, has recently joined Leumi ABL as Regional Sales Director where his new role will involve overseeing the successful integration of the new clients within the Leumi ABL team and providing ongoing client relationship management from the Brighton-based head office.

Xavier Denecker, Managing Director of Coface in the UK and Ireland, said: “Coface is discontinuing its receivables finance activity in the UK to focus on its core business, trade credit insurance.  We are confident that our receivables finance clients will find at Leumi ABL the business understanding and quality of service they appreciated at Coface.  We look forward to developing with Leumi ABL a strong partnership between receivables finance and insurance.”

Coface were advised and supported by Rupert Rawcliffe of Grant Thornton and Paul Scrivin-Wood of ABL Resourcing.

Article contributed by Leumi ABL

Wesley Harfield joins with 20 years experience in the asset finance industry to help grow the business through increased levels of origination within the broker, direct and vendor channels and will report to head of asset finance at the specialist bank, Mike Francis.

Francis said: “Wesley’s appointment will help us to grow both our already very successful small-ticket broker business and our vendor business, based within our subsidiary Lease Direct Finance, one of the largest asset finance brokers in the UK.”

Harfield joins Investec from his previous role as managing director of Lombard Specialist Finance at time of steady growth for the Asset Finance business which has seen a five-fold increase in profit since 2010.

“I’ve known Mike and the business for a long time – we have done business together before,” Harfield told Leasing Life. “This is an exciting place to be. The recent history has been quite prolific – we are in a good place.”

Harfield and Francis both identified growth in the broker sector where the bank acts as funder as important to the future of Investec AF and suggest they will expand to middle ticket assets as well as new lending products.

“We are looking to expand in a controlled way, said Harfield. “There are some niche product areas I’ve had historical experience of that I think we could move into.”

Harfield mentioned invoice discounting as a possibility, expansion of Investec’s block discounting operation, which currently just a small part of business and contract hire. Investec AF has got a taste for the latter thanks to the acquisition of Masterlease with Leasedrive in late 2010.

Francis is positive about the position of Investec AF and its future and says the division is open for business and seeking new partners in brokers and for vendor finance programmes. However, he identifies the Eurozone sovereign debt crisis and the need for asset finance to increase its exposure as two potential hurdles to growth.

The eurozone crisis he says, unlike the global financial crisis of 2008 which was consumer and corporate led, is country led and as yet is not coming down to corporate level but, added Francis, Investec AF’s relatively short-term portfolio of leases will dampen any impact should the crisis worsen and affect business.

With his new head of sales looking at new lending products and an increasing spread of customers Francis has confidence in the future of business.

Article contributed by Leasing Life

The funds have been invested by a consortium of leading global investors, including funds managed by Goldman Sachs Asset Management, Honeywell Capital Management and the Ohio Public Employees Retirement System. Funds advised by AnaCap Financial Partners LLP (AnaCap), Aldermore’s existing lead investor, have also increased their investment in the business and Morgan Stanley Alternative Investment Partners, Aldermore’s founding investor alongside AnaCap, also retain their significant investment.

Phillip Monks, Aldermore’s chief executive, said: “We are delighted with the strong support shown by these blue-chip investors for our funding round and for the continued support from both AnaCap and Morgan Stanley. This investment gives us an excellent platform for continued growth and to offer real choice and competition in the UK banking market.”

Peter Cartwright, co-managing partner of AnaCap and non-executive director of Aldermore, said: “We are proud of the group of investors that has been assembled to support the continued growth and development of Aldermore and are collectively excited by the substantial commercial opportunity that remains available to Aldermore as high street banks continue to neglect significant sectors of the UK banking market.”

Article contributed by Asset Finance International

The deal is an extension of the existing arrangement between the companies in the UK, in which the Berkshire-based company acts as one Sony’s vendor finance partners.

Peter Savage, managing director of Azule, said the German market had been crying out for a broadcast leasing specialist.

Azule’s relationship with Sony FS began in 2008 when it was asked to provide a specialised broker network for Sony FS’ UK leasing program.

Savage said Sony FS is now writing three times the amount of business it had been doing at that time, and considers his brokerage to have played a major role in this increase.

He said the success of the UK programme had prompted Sony to commission Azule to review the German market.

“Azule approached Sony with a proposal to carry out an analysis of the German market,” Savage commented.

“We did, and identified a number of German lessors that it would be advantageous for Sony FS to have in their portfolio for broker-style introductions. We then launched in September.”

Michelle Simpson, programme manager for Sony FS, said Sony wanted to enhance its existing lease offering with De Lage Landen by introducing a dedicated media and broadcast broker model alongside it, and said Azule’s network and sector understanding made it perfectly positioned to provide this.

Savage believes it is Azule’s experience and knowledge of a specialist sector which has allowed it to be one of the first UK brokers to successfully break into the German lending market.

“We’ve been warmly received by the German market; they recognise the fact the UK has got something they’ve been wanting for along time – a specialist in broadcast and media,” he said.

“In the broadcast market the UK is probably ahead of the rest of Europe in terms of the maturity of the leasing market so a lot of manufacturers are doing things in the UK they are unable to do elsewhere in Europe.

“Germany is a similar sized broadcast market and therefore is suitable for similar leasing deals.”

Azule and Sony FS’ German partnership already has its first deal proposal underway.

Article contributed by Fred Crawley, Editor – Leasing Life

De Lage Landen has reported first half net profit up 52% from last year, taking revenue beyond pre-crisis levels.The Netherlands-based asset finance company, a subsidiary of Rabobank, made €154m in the six months to 30 June 2011 compared with €101m for the same period last year.

Net profit for the same period in 2007 and 2008 was €109m and €112m, respectively.

Ronald Slaats, chief executive of De Lage Landen, said “With a first half year like this, I am bullish on our near future.”

The report also revealed a 1% increase in the company’s credit portfolio to €25.9bn.

Slaats said De Lage Landen had worked hard over the last year to increase the quality of its portfolio through a focus on risk management and said that strategy had started to pay off.

He said additional factors such as higher interest income and higher residual value gains on leased cars and other lease products, which fuelled a 13% increase in De Lage Landen’s non-interest income to €239m, helped the company to a successful six months.Despite the positives, looking ahead Slaats remained cautious.

He said: “We do not know yet what the impact will be of the recent uncertainties in the economic environment and financial markets in many geographical areas. So we are prudent in our prognosis.”

Article contribued by: Leasing Life

These were the words spoken by Chris Sullivan, chief executive of corporate banking for RBS in the UK, at a conference held recently by systems provider Sword Apak.

The comment was made in a discussion on the future of manufacturer finance programmes, in which Sullivan expressed his expectation that the majority of manufacturers would soon need to partner with banks in order to achieve access to capital at a sustainable price.

He argued that the cost of funding would only increase in the years to come, putting margins under pressure and forcing manufacturers either to think like banks in terms of the management of their treasury functions, or enter into risk-sharing partnerships with banking partners in order to provide both wholesale and retail finance.

Speaking exclusively to Motor Finance, Leasing Life’s sister title, Sullivan explained: “Of course, every set of circumstances is unique and a generalisation can’t be made. However, banks are increasingly acting as both advisors and funders to manufacturers, and even when manufacturers are providing finance themselves, it is likely that they are borrowing from a bank to fund that lending.”

Colin Maddocks, director of network development for Mazda Europe, agreed that manufacturers had to begin thinking about more than just “moving metal” in their provision of finance programmes.

“In working with bank partners across Europe, we have had to think about cost and profit implications for them – so we have learnt to think like a bank,” Maddocks said.

Change expected

Across the industry, business leaders have responded to the issue with unanimous agreement that captive strategy will have to change to reflect shifts in the capital markets, but have stopped short of sounding the death knell for the traditional captive model.

Black Horse managing director Chris Sutton commented: “Money costs are undoubtedly going to rise in the short term to counteract inflation, as economies continue to recover and money supply stimuli reduces. Manufacturers have been particularly active in supporting sales of new vehicles by providing subsidised finance, but as interest rates rise, this becomes increasingly expensive, especially around provision of zero/low rate APRs.”

Sutton contended, however, that manufacturers need not necessarily be at a disadvantage to banks in terms of access to capital. Traditionally, Sutton argued, banks have had the ability to raise funds to lend out at lower rates than major corporates, but that this had changed as the risk premiums attached to financial institutions had increased in recent years.

“Some corporates can now raise funds in their own right more cheaply than via their bank – depending on the strength of the balance sheet,” he said.

“Since the credit crunch, the importance of liquidity and availability of capital is now much more apparent for both banks and manufacturers. With any joint arrangement the profit element is usually required to be shared, which can place pressure on the margins needed.

“Personally, I believe that we will still see both models in operation in the future – some manufacturers will want, or need to, rely on banks to provide funding and some will be able to raise their own funding by other means.”

Adapting for survival

Meanwhile, consultant and former head of Mazda Bank, Ian Dewsnap, agreed that there would be ways for the current captive model to survive into the future.

“I would not for one minute argue with Darwin. Evolution is constantly going on, and the only constant is change – or whatever expression you care to use. However, I would not buy the argument that captives are dead for a while yet. To answer the question of how they will change, however, one needs to look beyond the UK.”

A dry securitisation market, poor access to funding and consequent higher operational costs, Dewsnap posited, had made some smaller markets no longer viable for single brand “true” captives.

He explained: “Creative solutions have emerged, with some manufacturers taking back ownership of wholesale and moving their point of revenue from wholesale to retail. Some have set up white label operations, others perhaps JVs.

“Certainly the landscape has changed, and the days of the captives in every market their parent brand operates in are gone.”

The survival of wholly owned captives, Dewsnap said, will depend on both the motives and the financial positions of their parents. The German captives in particular, he argued, had particularly strong treasury operations, and might prosper “for a long while yet.”

At the same time as these comments were being made, one German-owned captive – BMW Financial Services – made a muscular demonstration of its group’s confidence in its profit-making ability by completing the acquisition of ING Car Lease by fleet subsidiary Alphabet.

It was certainly enough to cause fleet provider Leasedrive’s commercial director, Roddy Graham, to re-evaluate his view of the viability of the captive model.

“Until last week, I would have agreed with the view that partnership with banks will become the only realistic way for manufacturers to offer finance programmes. However, the news that BMW has acquired ING Car Lease for a not insignificant consideration, and the fact that they will need to feed the business ongoing with a huge level of asset finance, suggests that this particular captive is alive and well.”

If, then, the captive model still has life in it, what will be the next phase of its evolution?

Dewsnap thinks that the situation may change dramatically once Chinese brands start to develop momentum in Europe.

“As and when the Chinese brands have a market share foothold, it will be interesting to see what their decision might be for the use of what seems to be plentiful capital access. Will they partner with existing players, bring Chinese banks with them as partners – or set up their version of the traditional captive model in larger markets?”

While few would disagree that those manufacturers who have chosen to ally themselves with banks will have an advantage in preserving their margins in a pricier funding climate, it remains to be seen whether truly in-house funders will fall foul of their traditional methods, or find new ways to compete.

Article contributed by Fred Crawley, Senior Reporter – Leasing Life & Motor Finance

Crawshaw told delegates at the Fleet Van Summit that the LCV market was “on its way back up”.

“There is an air of optimism about the CV market,” he said. “Manufacturers are now back producing new ideas and new vehicles are being brought out that had perhaps been tucked away.

“We have seen a lot of companies going out and tendering for new business which is a good sign. A lot of older vehicles are having to be replaced.”

Crawshaw pointed to the steady increase in registrations. “Van registrations are a true guide of what’s happening out there” he said. “These are genuine registrations. They are not vehicles that are registered and parked in a field.”

He predicted that registrations would be nearer 260,000 by the end of 2011 – up from 187,000 in 2009.

“That’s a huge increase. But we still have a long way to go to get back to where we were a couple of years ago,” he said.

Crawshaw also said that there were “some very strong residual values coming through, being supported by shortage of used stock”.

But there is still a focus on quality.

“The expectation of the used trade buyer hasn’t dropped during the recession,” Crawshaw said.

Article contributed by www.FleetNews.co.uk

Image copyright: Flickr

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