Diversity needed in funding of real economy

Quoting a report by financial services consultants McKinsey, Gouin, global head of SGEFs high tech division, said if banks maintain their current business model, return-on-equity could drop by between 7 and 11% by 2015 and added there was clear need for a revolution in banking, including leasing divisions. Gouin was speaking at the Invigors Executive Briefing on Manufacturer Finance, where the subject under discussion was the role of asset finance in the manufacturing business model.

Bank-owned leasing businesses could be at risk
unless they are financing the ‘real economy’, according to Patrick
Gouin of Société Générale Equipment Finance.

Quoting a report by financial services
consultants McKinsey, Gouin, global head of SGEF’s high tech
division, said if banks maintain their current business model,
return-on-equity could drop by between 7 and 11% by 2015 and added
there was clear need for a “revolution in banking”, including
leasing divisions.

Gouin was speaking at the Invigors Executive
Briefing on Manufacturer Finance, where the subject under
discussion was the role of asset finance in the manufacturing
business model.

Opening proceedings at the Institute of
Directors in London, Chris Boobyer, partner with Invigors EMEA,
said: “Asset finance is a key part of the economy and manufacturer
finance is a critical part of that.”

Addressing an audience of leasing,
manufacturing and support service professionals, Gouin argued for
diversity in manufacturing finance and outlined three options;
specialist vendor finance, fully captive, or a combination of the
two.

Of the latter, he said a mixed model, in which
a cooperative approach to risk sharing is taken, could work for
manufacturer captives in certain assets markets and customer
profiles.

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Kim Carter, vice president of the leasing
division of Ricoh Europe, was the speaker representing the captive
finance sector at the event.

Despite being responsible for the Japanese
electronics manufacturer’s transition away from vendor partnerships
over the last two years, Carter conceded outsourcing finance to
some degree could make sense for a captive in some smaller
markets.

However, Carter said Ricoh Capital Europe,
which has been established as a separate legal entity solely for
leasing, would be doing 100% of Ricoh’s finance business in the
continent and added she wanted the operation to be an example of
best practice for captives.

An expanded report on the Invigors Executive Briefing on
Manufacturer Finance will appear in the July edition of
Leasing Life.

grant.collinson@vrlfinancialnews.com