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August 1, 2009updated 12 Apr 2017 4:34pm

Country reports – Italy

Experts predict that new volumes in Italian leasing will be an extraordinary 20 billion less this year than they were in 2007 the boom year of Italian leasing

By Antonio Fabrizio

Experts predict that new
volumes in Italian leasing will be an extraordinary €20 billion
less this year than they were in 2007 – the boom year of Italian
leasing. International lessors, however, are bucking this negative
trend, as Antonio Fabrizio


Average value of the deposit required over the total costWhile Italy’s lessors look with concern at how the
recession is harming their businesses, new research has shown the
full extent of the sector’s fall last year and what may happen in
the current one.

It has already been revealed that the Italian
leasing sector declined by 20.8 percent to €38.8 billion.

The new study, which was published by Assilea,
the Italian leasing association, and which was circulated only
among its members, reveals in much greater detail the extent of the
downturn in Italian leasing.

It also includes unpublished data about the
major players, assets, values and structure of contracts, as well
as a regional breakdown.


The traditionally largest players in
Italian leasing continue to see the largest growth. The Italian
business arm of UniCredit Leasing – which for several years has
been the top lessor in the country – grew the most in the Italian
market in 2008, during which period it signed more than €6 billion
of new business, followed by Leasint with €5 billion.

The top players look set to keep growing, too.
As a result of a series of mergers which took place during the
year, Italy’s top 10 leasing companies have now increased their
total market share by over 5 percent.

These players held a combined 68 percent of
the total market share in 2008, while lessors ranked between the
11th and 30th positions saw a decline in total market share from 28
percent to 23 percent. The last cluster had around 9 percent of
total new business.

Inversely, however, the market leaders saw a
total new business decline of over 26 percent in 2008 – while
lessors in the middle cluster recorded a drop of only 6.7

Those in the bottom cluster saw volumes
decline by 2.6 percent. This trend has continued in 2009.

UniCredit Leasing reported a 40 percent
decline in new business in the first five months of the year,
although it retains its top position.

Its CEO, Massimiliano Moi, in an interview
with Leasing Life (see Building Bridges), said
that the company now prefers to focus on “quality rather than
quantity” in order to preserve the profitability the company
achieved last year.

He also accused some of his competitors of
focusing on a price-dumping strategy and selling below cost to
increase their market share.

Another, smaller lessor, Sardinian-based
Sardaleasing, which last year ranked 15th, has said it is seeing a
“counter-trend” compared to the rest of the market.

Its CFO, Renato Di Maria, said that in the
first five months of 2009 his company saw a 53 percent increase in
volumes and an 8 percent increase in the number of contracts it

Average value of new contracts
Assilea’s survey revealed the full extent to which leased assets
have been hit by the recession. Real estate leasing volumes dropped
by 34 percent to €15 billion last year, while rail and aircraft
leasing declined by 2.3 percent.

Equipment leasing declined last year by 11.4
percent to €12.2 billion, while vehicle leasing – including
commercial vehicle leasing – dropped by 7.5 percent.

In terms of value by assets, real estate only
reached 38.8 percent of the total leased assets, compared to almost
50 percent in the previous years, while equipment leasing amounted
to around one-third of the total.

Paradoxically, however, this could be a
positive sign in the long term.

Renato Di Maria pointed out that Italy’s focus
on real estate represents an “anomaly” within the European scenario
which weighed excessively on the overall leasing portfolio.

“The drop of the proportion of real estate
leasing in the total portfolio is a sign that this subsector is now
going down to more acceptable levels,” he said.

“A line that Italian lessors, together with
Assilea, are studying is to reach an ideal portfolio where real
estate represents around one-third of the total, favouring
equipment which should be the new mainstay of leasing, like in the
rest of Europe.”

Equipment leasing

A decrease in investments in leasing
by Italian firms has meant that the financing of machinery has also
declined significantly.

Transactions worth up to €50,000 declined by
11.8 percent, while those valued at between €50,000 and €0.5
million – which represent over half of the total equipment leasing
deals – dropped by around 14 percent. Those worth between €0.5 and
€2.5 million declined by slightly less than 10 percent.

Mid-sized lessors and non-Italian companies
reported an increase in new business volumes, offsetting the 15
percent decline recorded by the top 10 Italian lessors within the
equipment leasing sector.

As an example, the Italian branch of De Lage
Landen International last year had a 30 percent increase in new

The company’s finance manager, Daniele Lesma,
however, said that in the first six months of 2009 new volumes
realigned to the results recorded last year.

“Because we primarily work in the vendor
financing sector, the smaller volume of new investments this year
is primarily influenced by the performance of our partners, which
are suffering more this year,” Lesma explained.

However, DLL is already seeing signs of
recovery and Lesma said that the company’s pipelines were getting
full again.

“In particular, the health care sector has
shown growth in the first half of 2009, mainly due to investments
from the public sector,” he said.

Top 10 players in 2008 by new business

Other assets

All vehicle leasing subsectors
reported significant declines.

LCVs dropped by almost 12 percent, while
heavier vehicles went down by 5 percent, the first decline after
four years of uninterrupted growth.

The decline recorded by the main lessors was
offset by a more positive trend seen by captives.

Assilea said that CV captives saw an increase
of over 20 percent, although for heavier vehicles the increase was
less significant than for the rest of the market.

This figure, however, is expected to fall
significantly this year as new van and truck registrations went
down by almost 50 percent over the first five months of 2009.

Rail, aircraft and marine leasing dropped less
significantly thanks to an “extraordinary” rail leasing operation
for about €600 million, which alone represented almost 20 percent
of the whole subsector.

Yacht leasing, however, remained the most
important business within the rail, aircraft and marine segment,
representing two-thirds of the total number of contracts. Average
deal size in this sector totalled €524,000.

Sardaleasing said it entered the yacht leasing
market only recently, although it sees it as a “natural” business
due to its location in Italy’s touristic Sardinian island.

Di Maria said: “We hope to continue the growth
we’ve achieved so far in yacht leasing, despite it having been
penalised [by the recession] this year.”

“In 2009, like most of our competitors in
yacht leasing, we have seen a decrease. The middle cluster – deals
worth between €400,000 and €800,000 – is holding up relatively
better, while smaller deals have practically disappeared.”

Longer contracts

New leasing contracts have grown longer in
order to convince SMEs – which prefer to pay over longer terms – to
sign up to businesses. The bulk of Italian leasing is done to these
types of companies. Some deals have also been extended as part of
renegotiation of agreements with clients that face

This has meant, for instance, that the length
of existing deals increased by 128 to 138 months in real estate,
and by 46 to 51 months in vehicle leasing.

Existing contracts in equipment and machinery
have seen an extension to their lease terms of one month to 53

New contracts, for example, signed in 2008 for
hotels’ and supermarkets’ equipment and for office equipment had an
average increase of seven months. New construction equipment
contracts were on average three months longer.

Commenting on this trend of contracts being
extended, an MPS Leasing & Factoring spokesperson said: “We
constantly receive requests from clients in all sectors to redefine
their contacts, so we are often involved in a renegotiation
process, especially in the real estate segment, where the amount of
the rental is much more considerable.”

The Siena-headquartered company, however, said
it is very committed to supporting SMEs, in particular by focusing
on Tuscan-based businesses, which represent the majority of its
client base.

The future, however, does not look bright.
Assilea’s analysts expect new business per quarter this year to
grow by a total of around €8 billion. It predicts new business will
total €30 billion by the year end – far short of the €48.9 billion
record figure achieved in 2007.

UniCredit Leasing’s Massimiliano Moi predicts
the market will stabilise by 2010. However, there are many
variables which will go into whether this takes place or not.

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