Restructuring Leasing Portfolios
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Transcript of Restructuring Leasing Portfolios
Prague, 2nd February 2012
Restructuring Leasing Portfolios
Bas Hoekstra
Head of Product Management
Keeping up with Stakeholder demands
Background - Company overview
Profile ING Lease
ING Lease is a product of ING Bank providing asset-based finance solutions to its clients on a pan-European scale. ING Lease operates under the brand name ING Lease providing financial and operating lease services:
BackgroundWholly owned by ING Bank N.V.
Scale € 17.6 Bln
Tradingparent trading in Amsterdam (INGA)
Target Customers
SME, Mid Corporate and Corporate segments, present in 16 European countries
Route to MarketBank channel, Direct, Vendors, Intermediaries
Number of fte 1527
Number of Clients
170,000
Key player in Europe
ING Lease is the 6th largest leasing company in Europe according to the Leaseurope 2010 ranking, which is based on new production volume.
Rank Company Name
1 BNP Paribas Equipment Solutions
2 UniCredit Leasing S.p.A.
3 SG Equipment Finance
4 Volkswagen Leasing GmbH
5 Deutsche Leasing
6 ING Lease
7 CREDIT AGRICOLE LEASING
8 De Lage Landen International B.V.
9Leasint – Centro Leasing Banca “Gruppo ISP”
10 Nordea Finance
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The current environment challenges status quo…
Political
Regulatory
• Ultimate capital targets under Basel III, including SIFI buffers, not yet known
• Ultimate rules on liquidity and funding not yet clear
• Additional measures under discussion
Economic
• Ongoing crisis in the Eurozone
• Longer term solutions require strong European leadership
• Elections pending in major global economies in 2012
• Sovereign debt crisis ongoing
• Volatility in financial markets
• Very uncertain short-term economic outlook in EU, US and Asia
Restructuring Leasing Portfolios - February 2012
Adapting to the new environment
Customer Centricity
Operational Excellence
Balance Sheet Optimisation
This implies rethinking of ideal portfolio make up
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We have aligned our business closer to the bank’s
Which implies:
Hierarchical changes and functional steering.
Product Management organisation instead of a holding organisation.
Recognition of RWA benefits of the product.
Aligning to client base of the bank where feasible and profitable.
Tapping in to distribution network where efficient and cost effective.
Adapting to target segmentation local bank
Restructuring Leasing Portfolios - February 2012
Bank onlyBank only
Bank and leasing presenceBank and leasing presence
Bank and leasing closer aligned presence Bank and leasing closer aligned presence
Deposits (total corporate)
Example ING Poland
16,5
14,5
7,4
6,7
5,3
4,6
4,6
3,9
3,5
3,1
15,0
13,8
7,0
6,8
6,5
4,1
2,9
2,7
2,7
2,6
Loans (total corporate)
PKO BP
Pekao
BZ WBK
Citibank
Millennium
Raiffeisen
BRE Bank
BGŻ
Nordea
Pekao
PKO BP
BRE Bank
BZ WBK
Raiffeisen
Millennium
Kredyt Bank
Citibank
Getin
Bank is leading market player
Restructuring Leasing Portfolios - February 2012, Market share, Sept. 2011, % Source: NBP; DMK5
No Company name Market share
1 Europejski Fundusz Leasingowy S.A. 14,7%2 Raiffeisen Leasing Polska S.A. 11,8%3 BRE Leasing Sp. z o.o. 7,9%4 Pekao Leasing Sp. z o.o. 7,3%… 16 1.7%
Vehicles in 2010 (production)
No Company name Market share
1 Europejski Fundusz Leasingowy (EFL) 9,3%2 Millennium Leasing Sp. z o.o. 8,0%3 Siemens Finance Sp. z o.o. 7,8%4 BZ WBK Finanse&Leasing S.A. 6,9%… 14 3.6%
Machinery & Industrial in 2010 (production)
NoCompany
Market share (%)
1 Europejski Fundusz Leasingowy 11.92 Raiffeisen Leasing Polska 9.33 BRE Leasing 7.14 Pekao Leasing 6.35 Millennium Leasing 6.26 ING 5.0
Total ranking based on portfolio in 2010
ING Lease in top 10
Historically a mismatch in target segments
Asset mix within portfolio changes over time to balance out more evenly.
New support system for standardised lease product.
Extension/ development of Small Ticket Leasing capability for the Retail Bank Clients and part of the Corporate business.
New back office system - current system not able to support future growth strategy.
Change of distribution model - Sales increase via Corporate & Retail Bank
ING Lease specialised product staff in all Corporate and Retail Bank regions.
Leasing KPIs for Bank Account Managers
Operational Excellence:
FTE impact; Shift to smaller transactions results in substantial increase in number of contracts requires different capabilities for sales & servicing.
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
2011 2012 2013 2014
Real Estate Machinery Vehicles Other movables
New production per asset group (as % of total new production)
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Ranking largely due to excellent Real Estate presence. Lease used to target a different market segment than the
bank. Ambition: top 4 leasing company in the market
measured in production; number 3 in portfolio size.
To achieve that: Market share in vehicles, machinery & equipment needs
to be increased. Leading position in real estate and rolling stock needs to
be maintained.
It will result in a restructure of the portfolio mix: 40-60 RE-Movables vs 70-30 today
Ranking largely due to excellent Real Estate presence. Lease used to target a different market segment than the
bank. Ambition: top 4 leasing company in the market
measured in production; number 3 in portfolio size.
To achieve that: Market share in vehicles, machinery & equipment needs
to be increased. Leading position in real estate and rolling stock needs to
be maintained.
It will result in a restructure of the portfolio mix: 40-60 RE-Movables vs 70-30 today
Utilise bank sales network better
Bielsko-Biała1
ING Lease 2011
Corporate Sales Force 27
Retail Sales Force 13
ING Bank Slaski 2011
Corporate Sales Force 850
13 regions
12 Corporate Banking Centres
32 Corporate Branches
Commercial Banking 115
3 regional hubs
Lease financing integrated part of ING internet offering
Trade Finance » Project
ING Direct Business Credit »ABL One Face »
corporate lending »
« Front End« ING Direct Business« Electronic applications« Account opening on ING website« e-INGvoicing« on-line Trezor
« e-CustodyFX Trader »
ING BusinessOnLine as main Internet tool to offer all corporate products including Lease Internet / Contact Centre as main channel to service simple product clients Straight-through-processing
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Provide Lease on
ING internet s
ite
Provide Lease in
ING BusinessOnLine
(better service)
Provide Lease in Fast Track credit
process
(x-sell)
Enable the bank relationships managers to
offer lease (ABL) products on the same basis
Simplify and automate credit process for
Lease products offered for ING Bank
customers
Improve the efficiency of Lease processes =>
50% of ABL products credit decisions via short
credit process in Fast-Track
Main goal: Increase sales of Lease products among Bank Clients
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ABL One Face – Leasing facility
Focusing on mid- and small- ticket, bigger number of transactions, local currency ABL Product specification:
cars, trucks, trailers, building machines, forklifts PLN only average transaction – EUR 25 k process consistent with Bank’s procedures
There is a lot to be gained; Major shift – Major Benefits
Balance Sheet
Optimisation
Innovative
Customer Centricity
Better service bank and bank customer
Utilise liquidity and funding directly where it is sourced
Developing distribution channels. Improving operations. Drive for excellence.
Risk Weighted
Assets
From RWA perspective Leases are favourable:
Substitution of loans with leases.
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