Estonia’s battle against rising bad debt in the leasing sector
is set to get worse in Q2, with the country’s first quarter
reporting due in on 20th April.
In 2008’s final quarter, it is estimated that lease agreements
in arrears, especially in the motor sector, made up up to 5 percent
of Estonia’s combined lease book. Swedish bank SEB, however,
claimed that only 0.8 of its own portfolio was made up of such
contracts.
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It is understood that many of the deals in trouble are those
signed in the last two years, due to the rates and high residual
values built into contracts written during the period. News site
Balticbusinessnews.com hosted speculation that the debts are a
knock-on effect of unsustainable easy finance on luxury vehicle
brands.
Silver Kuus, chairperson of Nordea Finance Estonia, said that
the proportion of debtors was higher among lessees of used
vehicles. With Estonia’s secondary car market looking remarkably
flat, this observation poses a sticky disposals problem should
debtors default on loans.
Reet Haal of the Estonian Leasing Association said that, while
non-vehicle leasing had not yet been affected as badly as the motor
sector in terms of bad debt, the secondary market for plant was
looking in even worse shape than that for cars.
