money into the coffers of its state-owned agricultural lessor, to
the relief of the country’s agricultural community. Elsewhere in
the Commonwealth of Independent States (CIS), however, failing
currencies and poor export profits may have put the writing on the
wall for all but the largest international leasing companies.
and the Russian Agricultural Bank are set to receive around RUB70
billion (€1.8 billion) in aid from the Russian government, as part
of a larger support package worth more than RUB320 billion to help
businesses through the downturn.
Vladimir Putin, Russia’s prime minister, said that the funds had
been offered “to provide assistance to the real sector of the
economy, and pursue an active policy on the labour market”.
It is believed that the injection will spur demand for
agricultural leasing, which is already on the increase due to the
reluctance of Russian banks to lend to farmers in the current
credit climate.
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In neighbouring Ukraine, by contrast, the state-owned
Ukr-AgroLeasing company has had a bleak start to the year. At the
end of 2007, UkrAgroLeasing failed to break even, having reduced
net revenues by 16 percent year-on-year. In 2008, the Ukraine saw a
drop in crop export profits, despite farmers harvesting relatively
high crop volumes.
As a result, small-scale farmers, possessing fewer foreign
currency reserves, became less attractive to lessors hungry for
currencies other than the devalued Ukrainian Hryvnias. This point
was made clear by Peter Oberauer, MD of the Ukraine’s biggest
private lessor, Raiffeisen Leasing Aval, who commented that it was
just not feasible for international lessors to offer leases to most
farms with less than 10,000 hectares, due to the devaluation
issue.
UkrAgroLeasing thus became one of the few leasing to these
smaller farmers, due to its state-owned position. It is expected to
post significant losses in 2008 as delinquencies are understood to
have grown the more they leased to such riskier customers.
In December, the Ukrainian government drafted several
anti-crisis laws, many of which contained funding and tax breaks
for the agricultural sector. However, following an announcement
that Ukraine’s budget showed large deficits, it is now unlikely
that the agricultural industry will receive such aid.
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By GlobalDataFor those farms large enough to acquire hard currency through
exports, Raiffeisen Leasing Aval will continue to offer finance for
equipment, having bulked up its funding with two loans totalling
more than €100 million from its Austrian parent. The move is
understood to be part of preparation to capitalise on the possible
departure of several lessors from the agricultural market.
Meanwhile in Belarus, which has an economy more rooted in
industrial production than the Ukraine’s, and where 80 percent of
manufacturers are state-owned, there are plans to set up a state
leasing company to support industrial exports, particularly in the
steel industry.
Some 70 percent of Belarus’ exports are to the rest of the CIS,
meaning that export profits are largely tied to the relatively
stable Russian rouble.
With the Belarusian currency set to devalue by 20 percent this
year, as in the Ukraine, many smaller businesses are becoming
unattractive prospects for foreign-based lessors.
Maxim Lisitsky, MD of Raiffeisen Leasing’s Belarus subsidiary,
claimed that if the devaluation rate increases by more than another
5 percent, many of the country’s smaller lessors will start to
disappear.
