Guy Vanhautegem, Dexia Lease’s managing director, explains how
his company’s strategy is to focus on a personal approach to
selling to SMEs
SMEs, in particular family-owned businesses, are “the motor of
Belgium’s economy”, says Guy Vanhautegem, Dexia Lease’s sales
director. As well as SMEs representing 90 per cent of companies in
Belgium, groups with a turnover of under €125m per year represent
50-55 per cent of new production for Dexia Lease – and 80 per cent
of the group’s SME business comes from family-owned companies.
Dexia has an outstanding of €900m with SMEs.
“We think that it’s an advantage doing business with
family-owned companies,” Vanhautegem says, citing the personal
link, a loss rate of less than 10 basis points, and lower
bankruptcy rates enjoyed by the sector. This is in addition to the
faster decision-making process which typifies SMEs, he adds: “Big
corporates have to go to their parent company before they can make
a decision – SMEs are organised locally, there are one or two
shareholders, and they make decisions very rapidly so they can
react to what’s happening”.
Danger of private equity
Indeed, the main risk is successful SMEs being snapped up by
private equity, thus ending leasing contracts: “What we’ve seen
over the last years is private equity companies buying a growing
base of these family-owned businesses – and as a consequence
decision centres move abroad, along with the banking and leasing
relation,” he adds.
In terms of finding new clients, Vanhautegem says the open
banking atmosphere in Belgium and Dexia’s banking network mean a
close relationship can be built with SMEs from day one. For SMEs
with an annual turnover of €3m to €5m, relationships are often
managed at branch level together with a corporate account, with
Dexia Lease taking a back-office role for these contracts.
For larger SMEs, Dexia has a direct sales force of 10 people who
approach companies they believe could be a good fit, often based on
their accounts, which are made public under Belgian law.
Vanhautegem says this is both a blessing a curse: although it’s
easy to find up-an-coming SMEs to market leasing products to,
“everyone tries to get the same customers, so there’s lots of
This strong competition has an adverse effect on margins: “I
think the margins, in both banking and leasing, are amongst the
lowest in the European market,” Vanhautegem says, though he does
add that “due to the low margins there are not a lot of newcomers
into the market”.
With the new Basel II capital requirements coming up, he adds,
there is a real competitive advantage for the leasing industry, due
to the lower loss given default compared to classic bank lending.
As a consequence, leasing companies will need less capital, making
them more competitive.
Another advantage for SMEs is the country’s accounting rules.
SMEs are subject to Belgian GAAP rather than IFRS, which makes it a
lot easier to structure off balance leases. Furthermore, under
Belgian rules, finance leasing is subject to a simple distinction:
if the purchase option for an asset is less than 15 per cent of the
investment value, the legal and financial ownership rests with the
lessee, who will amortise the asset; for a purchase option over 15
per cent, the lessor is considered to be the economic owner of the
goods throughout the contract and he will amortise the asset.
He adds that Dexia also works with vendors, though loss rates
here are marginally higher as there’s no substitute for a direct
contact: “You get a good relationship and the SME advises you in
advance if there could be problems, so you can work together
pro-actively,” he says.
The group also leases to SMEs via Denizbank in Turkey and has a
retail leasing business in Luxembourg, but “we are focused in
Belgium”, he says. Above all, Dexia is dedicated to building a
close, personal relationship with Belgian SMEs who provide a
stable, exceptionally low-loss business. “Knowing your customer is
one of the major successes you can have,” Vanhautegem