Cost of capital and a detachment from
customers are among a string of challenges to face post-crisis
leasing voiced by industry leaders at Leaseurope’s annual get
together.
The heads of four of Europe’s largest leasing
companies also pointed to the death of finance leases and an
unhealthy focus on volume over profit, as potential threats for the
future.
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Jean-Marc Mignerey, SG Equipment Finance chief
executive, said: “Resources, liquidity and funding will remain
scarce. Regulation will make the cost of business higher. We have
to focus and add value by being specialists.
“Leasing died in 2009. A third of the market
disappeared in Europe, the sharpest decrease in the history of
leasing. Why? Internal finance, large companies using bonds issues,
limited access to government support for leasing, these are part of
it; and there are significant supply side factors – capital
preservation combined with a sudden tightening of underwriting. The
cost of capital has risen. Liquidity has a cost and we have to pass
that on to customers.”
Lessons learned from the crisis included the
need “to think a generation down the road,” Massimiliano Moi,
UniCredit Leasing chief executive, said.
“Risk always strikes back. In good times we
must build unnecessary reserves. That’s the lesson. We must think
not just short term. Think solar energy, ask ourselves ‘where is
the mistake we are making right now?’ Money is scarce. We must show
a positive return on every Euro of new business. And we need new
metrics by which to rank: a ranking by profit not volume. Volume is
a false positive.”
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By GlobalDataReturn on assets was put forward by Moi as a
better measure of success.
Ronald Slaats, De Lage Landen chief executive,
agreed that volume is no longer the most useful measure of success.
“In the Leaseurope 2009 ranking, we are number one by profit,
number eight by volume. I see people going back to competing on
price; I am not going to do it,” he said.
An observation shared by the leaders was of
finance leases losing their appeal, in some cases in favour of
rental agreements. “The financial lease is a dinosaur that will
die,” Slaats said.
Philippe Bismut, BNP Paribas Lease Group’s
chief executive, put it even more strongly. “The financial lease is
dead,” he said.
Predictions for the future included the
expectation that leasing would continue as a smaller, more focused
industry. “We need to invent capital-light leasing. We can, even
within banking, be spread innovators, customer satisfaction
boosters, response time cutters, systems innovators and champions
of quality,” Moi said.
