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August 9, 2019updated 13 Aug 2019 10:21am

Leaseurope criticizes FSB evaluation of SME financing

Leaseurope has responded to the Financial Stability Board document on evaluation of the effects of financial regulatory reforms on SME financing.

By Christopher Marchant

Leaseurope has responded to the Financial Stability Board (FSB) consultative document on evaluation of the effects of financial regulatory reforms on SME financing across Europe.

The FSB evaluation examined the effects of financial regulatory reforms on the financing of SMEs. The motivation for this evaluation stemmed from the need to better understand the effects of the reforms on the financing of real economic activity and their contribution to the G20 objective of strong, sustainable, balanced and inclusive economic growth.

Rafael Alarcón, senior policy adviser, at Leaseurope, said of the SME financing trends identified in the report: “Leaseurope considers that the report does not provide a comprehensive view of the characteristics of SME financing provided by banks and other financial institutions. Whilst the report focuses on bank and non-bank lending to SMEs, it fails to clarify which types of products are covered by each type of lending, and this clarification is crucial given the key differences in nature between bank and non-bank lending. We welcome the fact the report highlights the major role trade credit and bank loans have in financing SMEs, however we think the lack of reference to the role of leasing specifically is a major oversight.”

On the issue of trends, and whether the SME financing trends presented in the report could be considered comprehensive, Alarcón said: “This section of the report rightly mentions that the sources of financing for SMEs are diverse, and notes important differences across jurisdictions. It does however fail to provide evidence, such as the latest available data on the actual use of different internal and external types of finance by SMEs. The trends on bank lending also seem to focus more on types of lenders in the banking sector, as well as being based on geographical comparisons rather than the types of finance products offered by these lenders.”

In response, Leaseurope has suggested that findings of the European Commission and the ECB SAFE Survey -which looks at sources of finance by type- should be referenced more in the report. In addition, the trade association has requested that reference the major role leasing plays in SME financing, and general reference to the importance of leasing would be a welcome addition to the report.

Leaseurope is an umbrella of 43 associations throughout Europe, representing 93% of the European leasing market.

The Leaseurope index of lessors across the European continent has shown that new business volumes continued growing year-on-year by 4.4% in Q1 2019.

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