Handling uncertainty – how some leasing industry businesses have prepared for Brexit
Leasing businesses are managing forward planning with regards to Brexit as best they can, and this mainly includes access to Europe for UK businesses.
Acquis Insurance Management was the most recent to make a move to prepare for Brexit in June 2019.
It launched a company in the Netherlands as part of its European expansion strategy, following its management buyout by chief executive Nick Leader, backed by PE house Dunedin.
According to the company the regulatory independence of Acquis B.V. means Acquis is able to provide its services across the European Economic Areas (EEA) without being impacted by the uncertainty caused by Brexit. Acquis B.V. is also part of the company’s intentions to increase its penetration of the European asset finance insurance market.
Its Dutch office is regulated by the Netherlands Authority for the Financial Markets (AFM) and is authorised to passport its services throughout the European Economic Area (EEA).
Hitachi Capital UK
Earlier this year in April, Hitachi Capital Business Finance said it would expand its business into Ireland and within the Netherlands through its European Vendor Solutions division, allowing it to hedge for Brexit.
Hitachi Capital UK created its European Vendor Solutions in 2013, which the lessor said has grown to a team of three people writing £10m of business across three countries, to more than 20 people, transacting £242m in 17 countries in 2017/18.
In 2017 Hitachi Capital UK opened a branch of European Vendor Solutions in Amsterdam, which allowed the European Vendor Solutions division to strengthen its direct presence in Europe and increase cross-border lending capabilities, said Hitachi.
The growth has allowed Hitachi Capital UK to create a standalone subsidiary called Hitachi Capital European Vendor Solutions B.V in Amsterdam, which is now opening a branch office in Dublin, RoI, to support business growth.
Hitachi said the division is forecasting a 17% year-on-year new business volume growth for 2018/19, and that European Vendor Solutions B.V. would become “a European hub” marking a statement of intent to capitalise on its strong performance and continue to grow a permanent footprint for Hitachi Capital UK in continental Europe.
In May 2018, PEAC chief executive John Phillipou spoke to Leasing Life about building a European business from the UK, despite the Brexit vote.
To protect against macro-based shocks like Brexit, you have to be dynamic, said Phillipou, which includes treasury solutions at local level and creative deployment of funds in each country.
“If we were a bank, we would have a central treasury function that would have to come through that one bank channel. It would be a lot more difficult than the way we are set up now, with which we can negotiate in each jurisdiction to find an individual solution,” said Phillipou.
ABN Amro Asset Based Finance
In early 2018, Dutch lessor ABN Amro merged its Lease and Commercial Finance arms into one legal entity, ABN Amro Asset Based Finance, after many months of planning.
“The merger is about creating economies of scale, while reducing the number of duplicated regulatory and reporting requirements,” said Richard de Keijzer, ABN Amro Commercial Finance managing director [at the time]. “We used to have seven entities in four countries; we now return to one entity that has branches in those countries.
“Previously we had our Lease business in the Netherlands, Germany and the UK, and we had Commercial Finance in Netherlands, Germany, France and the UK. But they were different entities; for example, in Germany, the company format was a GmbH, whereas in the UK it was a Plc. Now we have created one new entity, ABN Amro Asset Based Finance, which reduces costs.”
In a feature for Leasing Life in December 2018, a Leasing Life analysis of the Financial Conduct Authority (FCA) register found that virtually all foreign-owned lessors operating in the UK do so through an FCA-authorised subsidiary rather than relying on passporting. There were a few notable exceptions, both in the consumer and the commercial space.
Big asset finance names with EEA-authorised branches in the UK include Deutsche Factoring Bank, part of Deutsche Leasing; Crédit Agricole Leasing & Factoring (CALF); RCI Banque, which handles Renault’s retail deposit business; and ABN Amro’s newly established Asset Based Finance (ABF) division.