Bob Diamond could not have given cultural commentators a better gift than he did in January 2011, when he famously declared: “There was a period of remorse and apology for banks. I think that period needs to be over.”
To note the retrospective irony here isn’t in any way original – virtually every writer of finance or current affairs editorial managed to bust it out on the day of his resignation – but it certainly bears a second look from here, down where leasing resides, in the quiet underbelly of the financial sector.
Yes, the social obsession with the Bad Banker may have been given a potent new shot of longevity, and that’s going to be an irritation to anyone who works in the sector. On the other hand, with that condemnation comes the equal and opposite public opinion – the longing for a kind of banking that isn’t callous or greedy or reckless, and which fulfils a social purpose.
Enter the good guy – the down-to-earth, risk-averse lender who eschews trading in”derivatives” and “incomprehensible” financial products, who lives in the real real world of buses and photocopiers and printing presses, and who is devoted to helping that most downtrodden of political caricatures, the SME, to stay on its feet and prosper.
At a time when provision of credit is central to every political party’s policy, supporting SMEs through a sensible product like leasing should be the equivalent of kissing babies and shaking hands with veterans when it comes to garnering positive public opinion.
There is huge political expediency in the act of stimulating lending, especially lending to the more personal end of business (the family-run, small-town SME), and it comes from the banker-bashing backlash which has been with us since Lehman Brothers and Northern Rock.
Of course, the fact that this presents an opportunity for leasing has clearly not escaped the notice of lessors, both bank-owned as well as captive and independent. Since 2008, leasing companies of all kinds have been keen to emphasise in their marketing collateral a marked difference from the banking sector in the way they deliver lending to businesses.
The problem is, we are now four years down the line and many potential business customers still don’t think of asset finance as their first port of call (or even as any port of call, for that matter) for capex funding. Furthermore, as our fleet feature this month shows, targeting SMEs with a leasing product still requires a very proactive and incentive-driven approach.
The second problem is that, despite the political keeness to keep the SME backbone intact through policy-making, governments still don’t seem to be doing so well in creating schemes and programmes of which asset finance providers can realistically take advantage.
In this issue Peter Collins of MAN Finance steps up to say what many in the captive finance industry have thought about the UK government’s National Loan Guarantee Scheme (NLGS), labelling it a gimmick which fails to encourage lending through asset finance.
Furthermore, going by comments made by lenders at the National Association of Commercial Finance Brokers’ recent expo, it seems there is industry-wide frustration over the difficulty in meeting criteria for government incentives and then working with the government to deliver the benefits.
While putting together the article on the NLGS, news broke of a separate credit-easing scheme announced by the UK government called Funding for Lending. At the time of writing it is unclear whether the leasing and asset finance industry will be able to benefit from the scheme, but it is indicative of the pace at which political necessity can affect the lending landscape.
Few could have predicted the furore around banking would remain as strong in 2012 as it was in dark winter of 2008 but for lessors, bank-owned or not, it is worth remembering that it is an opportunity of a kind.
If governments will help lessors to make the most of these opportunities, they stand to emerge, phoenix-like, from banking’s bonfire of the vanities. I did promise clichés in the headline…