It’s now more than two months since ING Lease withdrew from the UK asset finance market, having honoured its commitments to the end of November 2012.
The potential funding gap left continues to be one of the biggest stories affecting UK
asset finance brokers as we roll into 2013.
As far as the human cost is involved, we were very pleased to hear that the majority of ING Lease’s staff have found new positions with other employers in the asset finance marketplace.
We haven’t seen a great deal of trading since the withdrawal, because of the Christmas break, but at the NACFB we are hearing our brokers report that the volumes are now starting to build again.
The recent relaxing of the Basel III rules (see Basel III liquidity deadline extended to 2019, page 5) should now take some of the pressure off banks, allowing them a lot more time to raise capital before full compliance is required in 2019.
Close Brothers Asset Finance’s recent figures show that nearly 80% of UK firms feel that recent government funding initiatives are proving wholly inadequate in assisting their companies.
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Just 9% of SME owner-managers believe that the UK government supports small businesses sufficiently, while 83% argue that more could be done.
Close Brothers also revealed that over a quarter of SME respondents plan to increase their finance levels over the next 12 months, but the majority are considering attempting this through bank loans or overdrafts.
Fewer than 10% of respondents plan to do so through asset funding. At the time of ING’s decision to pull out of this market, returns on assets and returns on equity were both declining among asset funders.
But I have no wish to sign off on a negative note, and when you look for positive signals, it turns out they’re not hard to find.
For example, as George Ashworth, board director at the Finance & Leasing Association
(FLA), points out: "Although the percentage of total UK gross fixed-capital formation (excluding property) financed by FLA members fell in the recession, it has and continues to recover strongly, and now stands at around 28%… asset finance now accounts for more than half of all debt financed business equipment investment."
Recent figures from the FLA offer similarly encouraging reading: asset finance investment is reported as having grown by 7% in the 10 months to October 2012 compared with the same period in 2011. Asset finance brokers are reporting a very promising 26% increase in business.
And we fully expect like-for-like figures to continue the same movement, based on anecdotal data and on extrapolations from the NACFB’s own 2012 survey results.
The burning question is whether – and how – that £1.2bn asset funding gap can be filled. The first signs are that a number of alternative funders who offered to step in are now starting to come good on their promises.
I hope that there will be better news to report soon, as the NACFB continues to talk with all the asset finance funders in the market.
Adam Tyler is chief executive of the National Association of Commercial Finance Brokers