Despite having lost one of its
vendor finance stars to Hitachi, GE Capital is now focused on
Europe-wide expansion following a promising first quarter. Claire
Hack and Brendan Malkin report.
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The news of Marie Dunkley’s arrival at Hitachi Capital
Business Finance as its new sales director, revealed exclusively at
www.leasinglife.com last month, attracted interest from across the
leasing sector.
Coming on the back of a wave of negative
headlines about the Hounslow-based business finance arm of Hitachi
– mainly centring on the loss late last year of its former head,
Robert Munn – the important new hire suggested something of a
return to form for the Japanese lender.
Conversely, it seemed to reflect the
continuing troubles at the industrial vendor finance arm of GE
Capital, where Dunkley spent the last few years of her 10-year
tenure at the US giant.
One person close to GE Capital went so far as
to say that “GE Capital has cut back so much in the industrial
space that it recognised it did not need Marie anymore”.
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By GlobalDataThis appears to be far from the truth,
however. Isabel Fernandez, chief commercial officer in EMEA at GE
Capital, told Leasing Life that the company overall, in
fact, had enjoyed a solid first quarter in European equipment
finance, with an increase in volumes of 23%.
Staying strong
Its industrial segment alone had signed 10 new
deals in the first quarter of 2010, including new vendor finance
agreements.
Across its entire European leasing business,
GE Capital has signed as many as 26 new vendor finance programmes
since the beginning of 2010.
These do not include new vendor finance
agreements signed by its Italian leasing business, suggesting the
figure could be even higher.
Fernandez said: “In Europe, business in GE
Capital EMEA has a mandate to grow, and grow quite
substantially.”
The company expects to see “double digit
growth” in its leasing and vendor finance businesses over the
course of this year, and is also considering making new hires.
“We’re looking at trying to find talent in
leasing that strengthens us either in specific markets or across
Europe,” Fernandez said. “We’re looking at hiring people with
vendor expertise and leasing expertise.”
The growth will include leasing and lending
business, she said, and will also have a strong focus on the
industrial segment.
This includes an ongoing relationship with
materials handling company NACCO, with whom GE Capital has been
working for the last 20 years.
“We work with them across the world and we
finance Yale, Hyster and Barloworld, which are all brands at
NACCO,” Fernandez said.
“We’re an industrial company by background, so
we understand those assets well.”
A ‘pan-European’ approach
The company is looking to hang on to its
European leasing clients in its strongholds in the UK, Germany,
France and Italy, as well as gaining new ones via a “pan-European”
approach.
“We found we’re best and provide the most
value to our clients when we can service them across different
geographies,” Fernandez said.
The aim of the “pan-European” approach, on
which GE will be focusing in the coming months, is to target
clients with links to other business across the continent,
Fernandez explained.
Fernandez also stressed that the company has
continued to do high volumes of financing business in Europe,
including about $20bn (€15bn) of leasing since 2007.
“Our leasing and lending businesses are very
much core to ourselves and to our clients,” she said.
However, she admitted the company had
refocused its distribution finance business across the continent
since 2007-2008.
“We had dialogues with our clients to ask
where we can provide most value,” Fernandez said.
“What’s not key to us and where we don’t add
value to our customers is doing a 20-car leasing deal for a little
Belgian company, for example.”
Distribution finance is a form of asset-based
lending, which includes floor-plan finance and a form of finance
offered only by GE Capital.
GE will pay manufacturer for their products as
soon as they come off the assembly line and dealers will then pay
back GE.
The company still describes distribution
finance as a “growth business”, although it has reduced
relationships with smaller businesses that were not able, or did
not wish, to work on a “pan-European” basis, in countries outside
its key mandates.
The total reduction was from 111 contracts to
36, representing 10% of total volume.
Fernandez also described a “bullish” attitude
to staying in Europe and establishing new leasing and vendor
relationships there as other companies begin pulling back.
“The combination of geographies changing and
certain people not focusing on leasing anymore I think is going to
change dynamics in the market,” she said.
Efficiency matters
Fernandez was also keen to focus on GE’s
efforts to improve efficiency in approving finance for its European
clients, many of which are SMEs, including those that performed
poorly during 2009.
“What we’ve done a lot of is not only create
speed, but also work to ensure we can find solutions for companies
that maybe weren’t performing as well in 2009,” she said.
“We want to ensure we can really look at what
companies’ opportunities are for going forward.”
She added: “I would like to say that in the
current environment where SMEs have so many problems, what we’re
trying to do through asset-based lending is help these companies
continue to thrive and grow.”
