Bill Stephenson, Global CEO of PEAC Solutions keynote: “Why banks are now reconsidering their investment in asset finance”

Bill Stephenson, Global CEO of PEAC Solutions, will deliver the closing keynote at the Asset Finance Connect Leaders’ Summit Europe, that will be held in Brussels on April 16, 2024.

Stephenson will share his view that the asset finance divisions of big banks are suffering from an acute dependency on high capital availability and cheap funding, which has been the catalyst for the growth of low margin business. With the interest rate environment normalising and defaults now on the rise, these same firms will be under renewed scrutiny and pressure from their bank parents. This shift in market conditions will require these firms to undertake further calibration of the risk-reward balance in order to deliver a reasonable return on equity and justify further investment.

Stephenson further proposes that asset finance sales teams, who easily made their targets during the past halcyon days, will need to re-learn selling higher margin business or face the consequences. “If a business cannot successfully execute this pivot and achieve higher margins, they will be re-evaluated by their bank owners,” commented Stephenson. “This process is already underway and we could see strategic evaluations and retrenching actions on a level that our industry has not experienced since 2009.”

“Asset finance businesses operating within a bank need to recognise that in many cases, they are the last mouths to feed behind core banking operations and other more strategic investments,” Stephenson told AFC. “When capital becomes constrained and other priorities take hold, some banks could decide to exit the asset finance sector. In the US market, we are already seeing this change at some of the regional banks, and I think we are nearing a tipping point for the asset finance divisions at European banks.”

Entering his fifth decade in the leasing industry, Stephenson has successfully steered companies and was the chairman of a leading bank-owned vendor finance company before joining PEAC Solutions, which is an independent private-equity funded business. At the time, Stephenson saw the opportunities that such a business could have in the current market conditions, particularly given the strict Basel capital adequacy rules being placed on bank held firms. As Stephenson noted to AFC, “I do think these changes will create new business opportunities for the independents, as it will thin the competitive landscape and narrow the gap between the cheap cost of capital offered by banks and the funding available through private equity.”

This session will be of interest to:

Leaders of bank owned auto and equipment finance subsidiaries.
Manufacturer owned captive finance and private equity funded finance companies in auto and equipment finance.
Manufacturers involved in vendor finance and other types of finance partnerships with European banks.

Asset Finance Connect Leaders’ Summit Europe is an invitation only one day summit taking place at the Steigenberger Icon Wiltcher’s in Brussels on April 16, 2024.

Automotive and equipment finance companies who would like to attend this year’s event should write to louiseclavey@assetfinanceconnect.com or apply online at https://afcleadersummit.com/2024/en/page/submit-your-registration

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