As Santander forges ahead across Europe, it is committed to building up its asset finance capability across large parts of the continent. Brendan Malkin goes behind the scenes of its UK leasing arm and discovers a potential model for the rest of Europe.
Given the vast size of Santander – now encompassing the businesses of Alliance & Leicester (A&L), Bradford & Bingley and Abbey – and the fact last year it generated worldwide profits of £8.8 billion (€10 billion), Mike Oxby, head of its UK leasing arm, says his unit has “the best opportunities in the asset finance industry”.
The opportunities for rapid growth, by making use of the customer base of its Spanish parent bank and also through the sourcing of new business, as well as the potential for drawing upon some of the most skilled leasing professionals in the business, are considerable to say the least.
No surprises, then, when Oxby told Leasing Life he plans to triple the size of his business over the next two to three years – a target linked to Santander’s own ambition of gaining a 10 percent market share of global corporate banking within the same timeframe.
Oxby’s unit has already been busy signing new business since its formation last October, and in doing so has built upon A&L’s legacy leasing business – largely comprised of wheeled assets, predominantly in the bus, coach and public sector markets.
“I want to transform the vehicle finance business into a general asset finance company,” added Oxby, who admits it will be a “massive challenge” and since the formation of his business, he has already experienced “humps and bumps”. He added that “where appropriate” he would continue with “A&L accounts”.
Working towards this goal, around 40 percent of new business since last October has been comprised of a broad range of non-wheeled assets, including production equipment and robotic lines. Oxby’s unit has also signed two in-principle agreements for the financing of green-related assets, reflecting a willingness to sign up potentially riskier deals.
In addition, “coming to market shortly”, will be a brand new full-service contract hire business and also a full lifecycle IT leasing business, offering everything from “life management to disposal”, said Oxby. In order to manage these businesses, which he expects will be launched in April, he is now looking for “people with specialist capabilities”.
Working closely with other departments within Santander’s corporate team, particularly with its invoice finance department run by David Cotney, is also an important part of Oxby’s growth strategy.
Looking for fast growth
Ambitious to quickly grow the business, Oxby, who divides his time largely between Manchester (where his team’s back office is based) and the headquarters of Santander in London, said the UK leasing arm “doesn’t really have an upper threshold” of deal size. He also expressed willingness to sign-off smaller deals.
“If someone wants £100,000 for a large piece of infrastructural equipment, we will not be imposing restrictions on them,” Oxby said.
Oxby is a seasoned leasing professional, having joined Santander last October from Lombard where he was in charge of servicing corporate customers in northern England. Before that, he ran Key Equipment Leasing, the UK arm of Key Equipment Finance.
The creation of Santander’s UK leasing arm is part of a joined-up initiative by the company to develop asset finance across Europe.
Santander has no single head of asset finance, largely because leasing is fully integrated within the Spanish bank’s corporate arm.
“Our route to market is now with our banking customers,” Oxby said.
However, part of his job is also to source new corporate clients for Santander, who are introduced to the bank via its leasing arm.
Although bank-owned lessors are becoming increasingly more integrated into the corporate arms of their parents, Santander appears to be leading the way in this respect. The days of leasing being a separate part of banks appear to be numbered.
Finding the right people
Oxby’s team is a relatively small cog in an extremely large machine, with just 40 staff reporting to him, but it is highly likely it will grow rapidly, just five months since creation.
He has already hired some well-known names in UK asset finance. As well as Charles Garfit, formerly of auction house GoIndustry DoveBid, who has been hired to run Oxby’s asset management arm, he has also hired Chris Hardwick. Hardwick, who now runs the London and southern region of the asset finance business, worked with Oxby at the UK arm of Key Equipment Finance, and before that he worked at GE.
Hardwick is particularly well liked among British lessors and brokers. One broker described him as “warm spirited”, and Jeremy Hall, the founder of UK lease brokerage Wyse Leasing, said he was a “pillar of the leasing community”.
Hall added: “We met when Chris was at GE many years ago, a time when volume bonuses to brokers were the norm. Chris committed GE to a bonus of well in excess of £100,000 – payable upfront before any business was done.
“I committed us to signing an exorbitant volume of business which, suffice to say, we missed. Potentially a difficult meeting for both Chris and I, it was the beginning of a great relationship after we wrote the cheque for the difference.”
Running the Midlands region of Oxby’s business is ex-Fortis Lease UK director, David Brownbill, while in charge of the northern business is Rob Crawford, who until recently was a senior relationship manager for large corporates at A&L.
Alongside them are a number of relationship managers who sit within the bank’s corporate banking teams.
More staff may be recruited as the business expands and takes shape. Oxby, meanwhile, is keeping a “very open mind” about his route to market. Although he made clear he was “not going down the broker model route”, he admitted “there might be instances where brokers could be involved with major customers where it is strategic to do so”.
Asked to comment on whether he would sign up to vendor finance agreements, he said “not today”. He added that he would “definitely not” manage or provide finance to captive finance programmes, although he qualified this by saying that “if a major bank relationship needed this he would be open to the idea”.
Putting together the right model will take time. What Oxby is sure of, however, is the need to surround himself with the right people.
“I learned many things at Lombard, including the need to have the right team and the right people,” he said.
With many challenges facing him over the months ahead, there is hardly a better time for putting into practice hard-won lessons.