In the first of a regular section on
business performance across Europe, Leasing Life investigates just
how bad the recession is affecting once thriving leasing economies
in Central and Eastern Europe.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Romania’s arrears figures as a percentage of
overall debt – which even last November were as high as 5 percent –
now total a whopping 8.44 percent.
Such figures, similar to the proportion of all
non-performing loans in Romania and which relate to combined debt
over 60 and 90 days, are representative of the state of leasing
across most of the CEE.
New business in the leasing market in Romania
is believed to have halved in size during the first quarter of this
year.
All asset segments have been hit by the
downturn, according to Bas Hoekstra, vice-chairman of the Romanian
Leasing Association and MD of ING Lease Romania, who described the
country’s leasing industry as performing “very badly”.
However, it is the vehicle market – accounting
for 60 to 70 percent of the country’s total leasing market – that
has been most affected, Hoekstra added.
Equipment finance, which in Romanian leasing
statistics includes commercial vehicles and construction equipment,
was also significantly down.
“The same manufacturer that in one month last
year would sell a thousand trucks, and finance 90 percent of that,
today sells 10 trucks and finances maybe a handful,” Hoekstra
said.
This decline in the construction sector
reflects the lack of government investment on buildings and
roads.
A similar depressed picture also exists in
Hungary where, after losing ground in the second half of 2008, it
further plunged in January and February 2009.
In that period, construction equipment finance
dropped by 82 percent and machinery decreased by 62 percent,
according to Gabor Levai, general secretary of the Hungarian
Leasing Association, who said equipment leasing was the hardest hit
of all asset segments.
The decrease in equipment leasing in Slovakia
during the first quarter of 2009 was less sharp than that of
Hungary and Romania. It dropped overall by 45.9 percent in the
first quarter of 2009 while machinery leasing declined 40.3 percent
– to a total of €87.6 million compared to €146.8 million in the
same period last year.
The financing of wheeled assets – which
includes equipment leasing – generally contracted, although heavy
trucks were particularly badly hit, seeing volumes decline by 71.3
percent to €41.4 million from €144.2 million in the first quarter
of 2008.
Total outstanding figures for Slovakia’s
assets in March 2009 stood at approximately €9.4 billion, down from
€9.6 billion in the same period one year before.
Bank-owned leasing companies have not escaped
either.
“Whether their parent is Turkish, Greek,
Austrian or another nationality, they are all suffering from a lack
of liquidity, and their shareholders are saying ‘no’ to major
investments in Romania at the moment,” Hoekstra said.
Vendor finance has dried-up almost completely
in Romania, in sharp contrast to Hungary where it is the country’s
dominant channel, sourcing about 60 percent of new business.
Hoekstra said: “While for many other Eastern
European countries vendor finance is quite significant, Romania is
perhaps a step behind them – so companies like Cisco and Oracle
first enter Poland and the Czech Republic, and only later will
enter Romania, which is less developed because the communist regime
was far more severe.”
Romanian lessors can be positive about one
thing, however – as from later this month it is expected VAT will
no longer be deductible for companies when they take out a finance
lease.
According to Hoekstra, this might result in a
shift from buying assets to leasing them, and from finance leasing
into operational leasing.
However, as the leasing industry across the
CEE remains under pressure, there is still not much room for
comfort.
Antonio Fabrizio
