COVID-19 Impact on Corporate Leasing Sector: A Timeline

How has the global spread of coronavirus impacted the asset finance community? This timeline offers a blow-by-blow account:

22 July

Lenders support more than 1.1m businesses with £47.9m in Covid-19 schemes

The banking and finance industry has approved £47.9bn to over 1.1m businesses so far through government-backed coronavirus lending schemes, according to statistics released by HM Treasury.

The Bounce Back Loan Scheme (BBLS) continues to provide new support to thousands of small and micro businesses every day, with 1.08m businesses having received a total of £32.8bn

Lenders have approved £12.2bn worth of facilities to 55,700 companies adversely affected by Covid-19 via the Coronavirus Business Interruption Loan Scheme (CBILS), aimed at larger enterprises – has seen £2.9bn approved to 428 businesses.

1 June

Covid prompts NACFB to postpone Expo to March 2021

In a sign of the times, the National Association of Commercial Finance Brokers (NACFB) has postponed its flagship Expo event (originally scheduled for September 2020) until 24 March 2021, at the same venue, Birmingham’s NEC.

27 May

£27.5bn in financing provided through Covid-19 schemes

Figures published by HM Treasury reveal how the banking and finance sector is helping businesses of all sizes get through these tough times.

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26 May

Hungarian leasing market down 10% from Covid-19 in Q1 2020

Asset-based financing in Hungary slumped by 10% during Q1 2020, according to the Hungarian Leasing Association (HLA). The Hungarian leasing market closed the first quarter …

April equipment leasing across Europe fell to 45% of Q1 2020 average: Acquis Index

April’s equipment leasing origination volumes for the European asset finance and leasing sector fell to 45% of the Q1 average for 2020, according to the …

12 May

Lenders provide almost £15bn to businesses through Covid-19 loan schemes

The banking and finance industry has provided almost £15bn to over 304,000 businesses so far through the three major government-backed lending schemes, according to government …

11 May

UK debt purchaser targets CBILS candidates with overdue invoices

Azzurro Associates, a buyer of commercial non-performing loans backed by a US investment fund, has announced its intention to provide cash against at least £1bn of UK businesses’ unpaid invoices.

Azzurro said that as the Government’s Coronavirus Business Interruption Loans Scheme (CBILS) takes time to get off the ground, businesses with £50,000 or more of unpaid commercial debts could quickly improve their cashflow by obtaining cash through its debt buying service.

7 May

Asset finance market falls by 28% in March 2020, FLA

Total asset finance new business (primarily leasing and hire purchase) fell by 28% in March 2020 compared with the same month in 2019, according to figures released by the Finance & Leasing Association (FLA).

Lenders provide £5.5bn to SMEs through CBILS scheme

The banking and finance sector has lent over £5.5bn to SMEs so far through the Coronavirus Business Interruption Loan Scheme (CBILS), according to UK Finance.

6 May

Top 5 UK banks’ credit losses for Q1 2020 higher than the whole of 2019

The UK’s five largest banks – four of which run active asset finance divisions or subsidiaries – raised £7bn of expected credit losses in Q1 2020, according to Fitch Ratings.

5 May

UK SME growth outlook collapses, Hitachi poll finds

Gowth expectations by UK small businesses plummeted from 39% in April to just 14% in Q1 2020, according to a recent survey by Hitachi Capital (UK) plc.

30 April

Lenders provide over £4bn to SMEs through CBILs

The banking and finance sector has provided over £4.1bn to SMEs so far through the Coronavirus Business Interruption Loan (CBIL) scheme, UK Finance has revealed.

23 April

£2.8bn provided to SMEs through CBILS: UK Finance

The banking and finance sector has provided over £2.8bn of lending to SMEs so far through the Coronavirus Business Interruption Loan Scheme (CBILS), as part of a broad package of support for UK businesses, according to the latest data published by UK Finance.

17 April

FLA urges MPs to consider a bigger role for non-banks and to reform CCA

The director-general of the FLA has urged MPs to back a bigger role for non-bank lenders and to consider reforms to the Consumer Credit Act (CCA) during his evidence before the Treasury Select Committee on the economic impact of Coronavirus.

15 April

UK asset finance market falls 7% in February: FLA

Figures released by the Finance & Leasing Association (FLA) show that total asset finance new business (primarily leasing and hire purchase) fell by 7% in February 2020 compared with the same month in 2019.

3 April

Fitch takes ‘rating action’ on six mid-sized UK banks active in asset finance

Fitch Ratings, a provider of global credit ratings, said it has taken “rating action” on a handful of mid-sized UK banking groups – all of which run asset finance divisions or subsidiaries – to reflect the downside risks to the banks’ credit profiles triggered by the coronavirus pandemic.

2 April

‘We may be looking at a six-month correction’ says equipment finance chief

Eamonn McMahon, the managing director of EquipmentConnect, an online asset finance marketplace for SMEs in the UK and Ireland, said the slowdown precipitated by the coronavirus would be “quite severe” but would “not last particularly long”.

30 March

Oil tanker leasing rates spike 450% in March as Covid-19 hits

Rates for chartering very large crude carriers (VLCCs) have surged exponentially, weekly, from mid-March 2020, following a recent crash in crude oil prices. 

VLCC rates peaked approximately 450% higher, compared to March 2019, for routes between the Middle East Gulf and the US Gulf. 

27 March

Fiducia launches asset finance division amid Covid-19 outbreak

Financial services provider Fiducia Group has timed its asset finance division launch with the cashflow crisis facing SMEs as the coronavirus outbreak hits the UK.

The group, which was founded in 2001, said the division will look to arrange to fund SMEs asset finance as the sector returns to health on the back of the government’s cashflow support for small businesses.

NACFB supports army of self-employed brokers with 4-month membership-fee holiday

In a bid to help steer its membership through the coronavirus upheaval, the National Association of Commercial Finance Brokers (NACFB) has told its members that they will not be levied membership fees for four months.

The overwhelming majority of the NACFB’s 1,930 members are self-employed, many working as sole traders who submit a tax return via self-assessment.

25 March

67% of SMEs don’t believe they will be around to benefit from CBILS: poll

A survey by invoice finance provider MarketFinance has found more than two-thirds of respondents (67%) believe government loans will not reach them in time and they will run out of cash before Easter (12th April).

24 March

Finance Ireland shelves €100m IPO as Covid-19 weakens markets

Finance Ireland, a state-backed non-bank specialising in asset finance and leasing, has suspended a planned €100m (£85m)-plus initial public offering (IPO), the Irish Times reported.

The lender cited weakening market conditions in the wake of the coronavirus in recent weeks, for its decision to withdraw its IPO listing on the Irish stock exchange, scheduled for May.

23 March

Coronavirus loan scheme for SMEs open for applications, says BBB

The Coronavirus Business Interruption Loan Scheme (CBILS), unveiled by the Chancellor of the Exchequer earlier this month, has opened for applications from small businesses today. 

The CBILS supports a wide range of business finance products, including invoice finance and asset finance facilities as well as term loans and overdrafts. 

20 March

OneSavings’ share price falls as lender declines to issue Covid-19 outlook for 2020

OneSavings Bank, a provider of asset finance, saw its share price fall yesterday despite it posting strong full-year 2019. results.

The UK-based challenger bank declined to issue a full-year outlook over coronavirus-related uncertainty in its results statement, prompting a share price fall.

The bank “set a new 52-week low during trading on 19 March when it reached 155.30. Over this period, the share price is down 43.82%,” according to the FT. On 20 March its share price closed at 210.00.

19 March

Coronavirus SME stimulus available from 23 March

Financing of UK SMEs under the Coronavirus Business Interruption Loan Scheme (CBILS) is to become available in the week commencing 23 March, the British Business Bank (BBB) has confirmed.

18 March

Cancelled conference morphs into online sessions as Covid-19 reality bites for IAFN

A recommendation by the UK government to limit mass gatherings in the wake of the coronavirus has seen the International Asset Finance Network (IAFN), a provider of events for the leasing sector, cancel a London conference in June.

17 March

Covid-19 flight bans will shake up aviation finance, says analyst

Flight bans imposed by governments around the world to manage the coronavirus pandemic will significantly shake up aviation financing, according to Scope, a German-based credit rating agency and financial analyst.

16 March

NACFB head office closes with staff to work remotely as Covid-19 grips City of London

The trade body for leasing and asset finance brokers in the UK has instructed its head office staff to work remotely from home as coronavirus takes its toll on the City workers travelling to their physical workplaces.

National Association of Commercial Finance Brokers (NACFB) has instructed its team of 16 to work from home as the offices at 33 Eastcheap will be closed “until further notice”.

12 March 

Budget 2020: Coronavirus SME stimulus waives 2% fee on UK asset financing

UK government unveils Coronavirus Business Interruption Loan Scheme as part of its Spring Budget incentives targeted at small business. The stimulus offers asset finance and invoice finance through approved lenders to a £1.2m limit.

US equipment leasing confidence dips 21% in March

In its first signal that the coronavirus pandemic is hitting the US equipment and leasing sector, a national survey identified a confidence decline of 21% in February this year, against January, according to the Equipment Leasing & Finance Foundation, a non-profit industry research body.

US equipment leasing trade body cancels April events

Equipment Leasing & Finance Association (ELFA), a trade association for the US leasing equipment sector, announces the cancellation and postponement of its April events due to coronavirus threat.

The events cover the Women’s Leadership Forum (April 20-21), the 32nd Annual National Funding Conference, (April 21-23), the Best Practices Roundtables (April 21) and the Emerging Talent Networking Event (April 21), all of which were to take place at the Hilton Palmer House hotel in Chicago, US. 

11 March

Budget 2020: Chancellor supports supply chain finance for SMEs

The government, in concert with the Bank of England, today announced a raft of measures to immunise the economy – if not its people – from the global effects of a coronavirus outbreak, which this afternoon was declared a global pandemic by the World Health Organization. 

5 March

The Leasing Foundation (UK) postpones networking London event

The non-profit group tells supporters that it will postpone a key event in its diary, Expect the Unexpected, a breakfast meeting for 10 March. The venue organiser, RBS, said that according to bank guidelines in the current environment, the venue would no longer be available.

4 March

Coronavirus could hit UK plcs’ cash flow, says Carney

Mark Carney, the outgoing governor of the Bank of England, outlined plans to help businesses in the event of a major outbreak of coronavirus. Carney told MPs on the Treasury select committee that the economic effects of Covid-19 could last up to six months and that there would be disruption, not destruction, to the UK economy.

1 March 

Vessel leasing falls by two-thirds since December

The Financial Times reported that a significant drop in the cost of vessel leasing offers clues on the damage done to the shipping sector by Covid-19.

The Baltic Dry index – a measure of shipping costs for a wide range of bulk commodities such as coal, iron ore and grain – which shows rates for leasing the largest vessels have dropped two-thirds since the start of December “and are significantly below the average level of the past 20 years”, the FT reported. This is indicative of the sharp reduction in demand from China, the world’s biggest consumer of iron ore and other industrial commodities.

27 February 

US equipment leasing volume up 28% in January

Figures released by the Equipment Leasing & Finance Association (ELFA), a trade association for the US leasing equipment sector, showed that new business volume for January 2020 was $9.2bn, up 28% year-on-year from January 2019. 

The EFLFA figures were released ahead of the US recording any effects on the economy from the coronavirus or Covid-19, something that the industrialised Western nations are beginning to predict will have an impact as February comes to an end.

26 February

Aviation financing vulnerable to Covid-19

Scope, a German-based credit rating agency and financial analyst, reported that aviation finance is at risk of severe coronavirus-related disruptions. 

“High aircraft values and low lease-rate factors do not properly reflect the commercial and operating risks facing airlines leaving the aviation finance industry in a vulnerable state in 2020 even before the extent of the coronavirus outbreak became clear,” said Helene Spro, director of project finance at Scope. 

25 February

Covid-19 may prompt China to seize control of Irish aviation lessor’s majority shareholder

In a sign the Covid-19 epidemic is hitting the aviation leasing sector, China is in talks to seize control of troubled conglomerate HNA Group, the majority shareholder of Irish aviation lessor Avolon, Bloomberg reported recently.

The government of Hainan, an island province in the south where HNA is based, may sell off the airline’s assets after the outbreak of the coronavirus on mainland China hurt the airline’s ability to meet its financial obligations, according to the report citing people familiar with the plans.

21 February 

Coronavirus puts pressure on Chinese leasing sector

Fitch Ratings, a global financial information services group, reported that the global spread of coronavirus is putting pressure on small independent Chinese leasing companies. 

“The delinquencies of the leasing subsidiaries of banks and significant SOEs are likely to stem from their aircraft-leasing business. Fitch estimates about 20% of total leased assets for lessors that are active in aircraft leasing are exposed to local airlines, whose revenue and cash flow are suffering from significantly reduced air traffic,” Fitch said in a statement. 

12 February

Aviation leasing may gain from coronavirus outbreak

Avolon, one of the world’s largest aircraft leasing companies, told the Irish Times that the leasing sector stands to benefit from the coronavirus outbreak, as airlines look to refinance their planes in an effort to hold on to their working capital. 

A sale-and-leaseback trend among airlines “will unquestionably be accentuated now, with the coronavirus,” Domhnal Slattery, chief executive of Avolon, said after the company posted $718m (€658m) in net income for 2019. “The phone hasn’t stopped ringing,” Mr Slattery said.

Covid-19 prompts Chinese airlines to refinance fleets

Global aircraft leasing company Avolon told the Financial Times that Chinese aircraft carriers are reaching out to do sale-and-lease-back transactions.

Domhnal Slattery, chief executive of Avolon, said carriers such as Cathay Pacific, the Hong Kong-based company, are cutting capacity significantly. Others are seeing their forwards booking down and so their cash positions have worsened, he said.