The leasing industry’s giant bumper sale
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The market is awash with uncertainties. We all know that
portfolios in droves are up for sale, particularly in the fluid UK
market, but the question is what will come of them.
The latest UK lessor to have gone down this route has been Tokyo
Leasing. The problem it faces is that many of its leased assets are
in the construction sector, and we all know what’s been happening
to that sector of late. Similarly, Kaupthing Singer &
Friedlander’s UK lease portfolio remains up for sale, months after
the company announced it planned to offload it. Unfortunately for
it few lessors’want to buy a business that has healthcare at its
core, not when margins in that sector are as tight as they are
right now.
Meanwhile, conversely, other markets have ridden the wave of
poor liquidity and are now buying and selling portfolios as if the
crunch had seemingly never happened. In recent weeks alone Italian
lessor A-Leasing, a subsidiary of Raiffeisen, securitised a book
worth in excess of €300m, and Banca Agrileasing SpA offloaded a
varied portfolio of auto, industrial vehicle, equipment, and real
estate lease contracts worth an impressive €973.4, Agrileasing’s
fourth securitisation in the last seven years.
Interestingly, particularly at a time when European banks
continue their implementation of Basel II regulations, a key reason
for A-Leasing’s securitisation was to put in place adequate
reserves in order to comply with Basel II rules.
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By GlobalDataOne way by which northern European lessors can overcome the
combination of a desire for sale and a lack of buying appetite is
to simply look to new markets. It is no secret that a number of
Middle Eastern banks have hired advisers to hunt down high value
lease portfolios from across Europe.
In recent months the London-based Shari’ah-compliant bank, Bank
of London and The Middle East, has increased its presence in the UK
marketplace following its entry in late 2007, and in June announced
its completion of a $50m syndicated Ijara leasing facility for
Dubai shipping company Al Ghadeer Marine Shipping. Other banks
involved in the deal include Jordan International Bank, Kuwait
Finance House in Bahrain, Boubyan Bank in Kuwait and Capital Bank
in Jordan.
Either way, the doom-mongerers among you are saying that the
leasing industry has to change to survive. Last month, they argue,
the future became a little less bright when FASB confirmed that it
would be pressing ahead with lessee accounting rules separate to
their treatment of lessors, a developed feared by many lessors. By
2010, then, it is believed all lessee accounting will be on balance
sheet.
To survive lessors will have to become even more invaluable to
their clients, and therefore only the fittest – and most specialist
managers of assets – will survive.
Brendan Malkin
brendan.malkin@vrlknowledgebank.com
