Banco BIG, a Portuguese investment bank, has expanded its auto
leasing operation BIG Auto, via several new branches and business
developments.
Since the company launched its auto finance product in mid-2006,
it has been struggling to gain significant market share and
profitability.
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Currently, BIG Auto, which is part of the bank’s specialised
credit division, holds only one per cent share in the auto finance
market, with a portfolio size of €10m.
Its various products include Aluguer Longa Duracao, a specialist
in purchase hire, which holds 70 per cent of BIG Auto’s portfolio,
as well as Auto Leasing, Auto Loan and renting.
Miguel Mira, director of specialised credit at Banco BIG,
said that while the “business is profitable nowadays, it is not as
profitable as we like it to be”.
Banco Big started as an investment bank in 1999, operating in
three main product lines, including online trading, corporate
finance and asset management.
In 2005, BIG introduced auto finance in order to diversify its
core business and become a “retail investment bank”.
Consequently, it has also launched products that include debit
and credit cards, current accounts with overdraft facilities, auto
finance and, recently, mortgages. It now has established 10
branches.
Despite the used-car market comprising around 30 per cent of the
Portuguese leasing sector, Banco BIG has steered clear of the
segment in a bid to remain conservative in terms of credit
policy.
However, Banco BIG does have some presence in the used-car
market via its ‘auto loan’ product.
“We decided to mainly operate in the new-car market because
someone who buys a new car is typically a better credit risk than
someone who buys a used car. BIG has only 40,000 clients and the
car-retail market is very concentrated,” Mira said.
He added that the bank’s inability to penetrate the retail
leasing market is the result of the company not having a
sufficiently wide reputation in Portugal, as well as the market’s
competitive conditions and BIG’s conservative credit policy, which
contrasts with wider credit facilities.
