and opportunity
A much more perturbed mood surrounds the release of financial
results this February compared with last year; but it seems
analysts, banks and financiers alike can breathe a sigh of relief
as losses seemed to be less than expected.
For example, while Barclays reported a £1.6bn hit from the
credit crunch, the write-down was less than feared, at just £300
million more than the £1.3 billion already announced last November.
Its asset finance businesses (Barclays Capital and the commercial
banking division), in particular fared considerably well.
Similarly, while Alliance & Leicester reported a 34 per cent
decline in net profit for 2007, its commercial lending business
posted a 30 per cent increase in core operating profit (See results
page 6).
Go deeper with GlobalData
RBS, on the other hand, reported a 22 per cent rise in 2007 net
profits to £7.55bn, thanks in part to the sale of assets.
John Bennett, managing director of global vendor finance at Bank
of America, and chairman of Leaseurope, encapsulated both the
dangers and opportunities that the credit crunch has created for
lessors.
“In the leasing market, a range of approaches can be seen behind
the results, from business as usual to closing down of a company,”
Bennett said.
Bennett noted that in the UK, 75 per cent of capital expenditure
is funded through by internal cash flow and debt markets. But
increasingly, companies will turn to the leasing and asset finance
sectors, which currently finances about 30 per cent of UK
businesses’ capital expenditure.
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By GlobalDataWhile asset finance, like credit cards and personal lending have
been surprisingly robust, they face threats from higher defaults
and fraud.
“Invoice discounting, factoring and leasing are particularly at
risk, there have been one or two incidents, such as the multiple
financing case of Nylecest.”
There is also the added concern that banks’ balance sheets have
not yet totalled the full impact of the 2007 market turmoil.
—By Katherine Greogory
TER recovers £1/4m of stolen P&M
The National Plant & Equipment Register (TER) has revealed
that it prevented the export of nine stolen items of plant and
machinery from the UK. The goods, valued at around £250,000, all
delivered by the same company, were identified as stolen, some of
which were found to have been shipped to Famagusta in Cyprus in a
consignment of around 100 vehicles. Tim Purbrick of TER said:
“Right now, TER is attempting to recover four stolen machines which
are already in Cyprus. It also shows how SE. England and London in
particular is a target-rich environment for equipment criminals
with easy access to international ports.
—By Brian Rogerson
IT financing to stay bouyant
Negating cries of distress in the asset financing market, market
intelligence firm, IDC and IT finance provider, Syscap, uncovered
buoyancy in the UK IT financing sector.
Syscap’s annual industry survey of 330 respondents, identified
that 60 per cent of buyers do not foresee any negative impact from
the ‘credit crunch’ on their IT spending plans for 2008. A further
83 per cent of respondents said finance and leasing are the primary
forms of IT acquisition, because they “allow acquisition without
outlay” (60 per cent), “capital to be deployed elsewhere” (57 per
cent) and “preserve cashflow” (39 per cent).
IDC also predicts that IT financing will shift from operational
to finance lease in the US and Europe.
—By Katherine Gregory
Bibby expands in Glasgow
Matching market demand and organic growth, Bibby Financial
Services, a provider of business cash flow solutions to small and
medium sized enterprises, has expanded its Glasgow city centre base
with a new operational and sales team. Graeme Scougall and Calum
Williamson, who both hold over 10 years experience in the industry,
will head the new team.—By Katherine Gregory
Cap re-engineers HGV code
Asset risk is a primary concern for asset financiers in leasing
arrangements, particularly with the fluctuating values in HGVs – an
issue which CAP, an RV data and asset management support company,
capitalised on with the introduction of a new HGV code structure in
January this year.
CAP re-coded 25, 000 vehicles via electronic systems, which hold
transactional, ownership and descriptive data relating to the
fleets, and a forecasting and disposal performance analysis.
ccording to John Dennis, CAP National Sector Manager at CAP
Finance, the new code replaces the archaic and expensive structure
in which financial institutions could only make crude calculations
for their automated quotation and asset management systems. It aims
to meet Basel II requirements for the full transparency of asset
risk.
The automated procedure is fed into the customers’ back office
for portfolio asset risk for review by risk managers to determine
current and future equity positions.
Initially issued in January, the new code will run concurrently
with the existing format for three months after which it will be
issued alone.
