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August 1, 2009updated 12 Apr 2017 4:34pm

The march continues

UniCredit Leasing surprised many observers last year when it managed to merge all of its disparate leasing companies under one umbrella

By Antonio Fabrizio

UniCredit Leasing surprised
many observers last year when it managed to merge all of its
disparate leasing companies under one umbrella. Then the recession
arrived. However, its ambitious director, Massimiliano Moi, still
managed to go on to institute a flurry of fresh changes.
Antonio Fabrizio
reports.

 

The recession has not spared
Europe’s largest leasing company, UniCredit Leasing, which has seen
a significant drop in new business as a result. However, since the
second half of last year, the Italian-headquartered lessor has
undertaken an array of actions on all fronts to absorb the effects
of the crisis and maintain its position within the European leasing
industry.

Last year it signed €12 billion of new
business while its year-end portfolio amounted to €38 billion. The
recession slashed volumes, however, by 40 percent in the first five
months of 2009. Some countries were worse hit than others, with
Austria only seeing a small reduction, while many other countries
in the CEE saw drops in volume of around 60 percent.
Unsurprisingly, it is now extremely cautious about who it lends to
in the CEE.

Despite this drop, the lessor is one of the
few European leasing companies to have established a truly
functioning European leasing network. It also completed the process
in the middle of a global economic downturn.

The restructuring, which went live in January
2009, has meant that all of its local leasing companies have merged
into a single network under the UniCredit Leasing umbrella.

Currently, the lessor operates in 17
countries, including Turkey and Russia, and has over 8 percent of
the combined market share of these countries. It is one of the top
three companies by volumes in 10 countries, and last year was
ranked first in Italy, Austria and Romania.

Its CEO, Massimiliano Moi, told Leasing Life
that with the restructuring there has been a “complete shift from
patchwork to network”. This network has also benefitted from its
link with its parent company.

In fact, alongside a dedicated leasing
business with around 3,000 employees, the banking network of
UniCredit, which comprises 10,000 branches across Europe, is
another important origination point for the company’s leasing
deals.

“Putting these two networks together, in every
small village in Poland or in Turkey a firm will find UniCredit
Leasing,” Moi said.

Within the network, the Italian branch has
taken charge of both “Italian execution” – managing the company’s
Italian leasing operation – and “global co-ordination”.

In practice, this means that the Italian
headquarters of UniCredit Leasing will handle a deal that
originates in Italy. However, the headquarters will also hold a
supervisory, “non-binding” position when a deal is originated
outside Italy.

UniCredit Leasing’s vendor finance business
has also been restructured and unified into a single “entry point”.
This operation is managed by global account managers handling all
international agreements, all of whom are based in Vienna.

Moi insists size does not matter to him –
remaining as Europe’s largest lessor is not a personal
priority.

“Our strategy change has included a shift from
volume to value,” Moi said. “In the current downturn, we are not
focusing on quantity but on quality and are happy to take less but
better business.”

Last year, this approach helped UniCredit
Leasing to obtain net profits of €302 million. He expects a similar
performance in 2009.

A strategy rethink for each country has also
taken place. In Ukraine, the Baltics and Russia, where risk is
higher, Moi has established a “golden rule” that its local
businesses cannot exceed the total size of the current portfolio.
This means that only contracts coming to an end will be replaced.
The other golden rule is they can only work with international
clients – not ones with “Russian or Ukrainian risk”.

This is, however, only a temporary measure and
Moi believes that the long-term growth potential in these countries
remains “unchanged and phenomenal”.

Meanwhile, the lessor plans to grow elsewhere.
For instance, despite its €3.2 billion of outstanding business in
Germany, it only has a 2.5 percent market share in the country. In
Poland, UniCredit Leasing is ranked fifth in terms of volumes – but
its parent is ranked first by banking assets volume.

Growth, clearly, is a priority for Moi. A man of boundless
energy, Moi also recently strengthened his credit decision making
and recovery teams – and moved around 250 employees from sales and
other departments into the back offices. On the same front, he has
abolished scorecards, preferring instead to look at each contract
individually. UniCredit Leasing’s march continues onwards.

Focus on SMEs

Despite the introduction of
swingeing changes to the UniCredit Leasing business, Massimiliano
Moi insists that what has not changed is the company’s focus on
small and medium-sized firms.

In Italy alone, last year it loaned more than
€2.7 billion to SMEs, and in the first five months of 2009 it
loaned another €550 million. This is all part of UniCredit Group’s
“Impresa Italia” (Italy Enterprise) project, which aims to make it
easier for Italian SMEs to access funds. The parent bank has
earmarked around €5 billion for this sector.

The lessor has restructured a sizeable number
of contracts for firms in financial difficulties but with “solid
fundamentals”. It restructured over 1,600 contracts in 2008 and
around 500 so far in the UK.

It also co-operates with the European
Investment Bank and other institutions to give funds to small
businesses across Europe. UniCredit Leasing recently launched a
project to measure customer satisfaction.

Finally, it ambitiously plans to target around
one million small and medium-sized firms which are doing business
with the parent company, but which currently do not use UniCredit
Leasing.

“But for that, and for further expanding our
network, there will be plenty of time,” Moi concluded.

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