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February 2016 www.leasingworld.co.uk

LeasingWorld Print & Digital Publications . Free E-newsletters Knowledge Centre . Website and Videos . Events LeasingWorld IN THIS ISSUE

china news 3 China: SME energy vehicles 3 Pavillon JV in China 04 3 Chinese lessor takes Saab ULEVs

asia news 4 Don’t try fiddling leases in Vietnam 4 Aussie launches leasing 4 Pakistan: leasing needs promoting

US news 5 Top 10 US leasing trends in 2016 5 US: Navy to lease 600 EVs

european news 6 Railpool takes E75m new locos 6 Leaseurope launches SME Roundtable

basel news 10 Is Basel III responsible for choking SME growth? 11 Basel Revised Boundary report 11 Basel IV?

AIRCRAFT LEASING 12 Aeroflot absorbs bankrupt 12 AerCap places 737s with Czech airline 12 A small community, a very big business 12 Macquarie AirFinance eyeing sale? 12 ’s view 13 Russian planes gain foothold 13 Air Lease Corp overweight? 13 A380 Voted best aircraft by Global Traveler readers 03 13 Iran airlines to lease

systems 14 NetSol Technologies in $100 million-plus contract 14 Cassiopae in Top 100 FinTechs 15 IDS Infolease 10® success 15 Linedata launches Mobil’Ekip 15 Puerto Rico client takes SuperTRUMP features 7 China update for asset financiers Exciting times ahead are predicted for the Chinese 07 09 financial leasing sector, with the impact of China’s new policies to boost financial leasing.

8 Prevention of fraud in Leasing Allan Foad comments on Leaseurope’s recent Fraud Prevention seminar in Brussels

9 IASB chief comments on Leases standard Hans Hoogervorst, Chairman, IASB talked about the new IFRS 9 and Leases standards as part of his introductory comments to the European Parliament in Brussels

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1 february 2016 www.leasingworld.co.uk editor’s comment

Is Leasing a worldwide community?

ello and Welcome! We at LeasingWorld certainly think it is! That famous leasing personality Sudhir Amembal coined the expression, “Leasing is a Hworldwide community,” but some question if that is the case. They ask, “Sure, leasing is a worldwide phenomenon, but are we a community?” The fact is that leasing industries across the globe are being inexorably drawn together by three common forces: the new lease accounting standards, the bank behaviour effects of Basel III, and the importance of the small and medium size enterprise segment to most lessors and to their governments. But that apart, if an Asian lessor were to share with a South American lessor a problem it is having locally, we are sure that the latter would not only sympathise and understand the problem , but also be able to give some advice or a sensible suggestion to help. And the same applies vice-versa. So, LeasingWorld magazine, in its 11th year of publishing, has put all its international news in one APP for you, easily accessible wherever in the world you may be, via smartphone and tablet, Apple or Android. So take a look, and if you furnish us with your email when you first access it, then we’ll let you know when every latest edition is available.

jan sZMIgin, editor [email protected]

We’re not asking for your business card . .

But leave your email address HERE and we’ll inform you everytime we publish a new edition of Leasing World International APP

2 february 2016 www.leasingworld.co.uk china NEWS

China: SME energy vehicles > IN BRIEF ins Finance Holdings Inc. (Nasdaq: WWINS), a financial holding company China’s 1st used-auto ABS that provides financing solutions to Renren Inc.has announced the issuance SMEs in China, reports that its wholly- of the Shanghai Renren Finance Leasing owned subsidiary, Jinshang International Asset-Backed Special Plan (the “SFRLAB”) Financial Lease Co., Ltd, entered into a on January 21, 2016. The SFRLAB will be purchase-and-leaseback agreement valued traded on the Shanghai Stock Exchange. at RMB100 million (US$15.42 million) The SFRLAB is China’s first asset-backed with Liaoning Sg Automotive Group Co., security product collateralized by finance Ltd. (“SG Automotive Group”), a leading leasing of used automobiles. Shanghai Stock Exchange-listed automobile manufacturer that is focused on developing capital investment profile in this sector has The originator of the SFRLAB is Renren’s new energy vehicle technology. become extremely attractive, and the sector subsidiary, Shanghai Renren Finance Lease “The new energy vehicle industry will be an area of focus for Wins Finance’s Co., a wholly owned subsidiary that was is one of the seven strategic emerging future business development activity.” established in 2015 and holds the requisite industries supported by the Chinese central “Our arrangement with SG Automotive licenses from the Ministry of Commerce government, which has promulgated Group facilitates our entry into this new in China. The SFRLAB is administered by a variety of supporting policies and business area by applying our purchase- Xinyuan Asset Management, a subsidiary regulations to create a beneficialand-leaseback model, which we expect to of Nanjing Bank. The size of the SFRLAB environment for the development of this provide us with positive returns at relatively is approximately RMB299.8 million and sector,” Renhui Mu, Co-Chief Executive low risk,” added Mr. Mu. “We look forward consists of three tranches: AAA-rated Officer and Chief Operating Officer of Wins to expanding in this industry and see the securities (68 percent), AA-rated securities Finance was reported as saying. “Under the financing as further evidence of our being (10.5 percent) and interests held by the central government’s policy of encouraging recognized as a versatile and innovative originator (21.5 percent). The SFRLAB is the development of new energy vehicles, the lease financing Provider.” rated by United Ratings. Deloitte and Qin Li Law Firm, a member of the international Deloitte network, advised the SFRLAB on internal auditing, accounting, taxation, cash Pavillon JV in China flow analysis and project coordination. Grandall Law Firm issued a legal opinion for avillon Holdings has sealed the deal Pavillon and BSRICT will each hold 50 the SFRLAB. Pto incorporate with Beijing State percent shareholding interest respectively. Research Interoperability Communication Pavillon and BSRICT will each pay Technology (“BSRICT”) into a joint US$15 million, or the equivalent in RMB ADB medical loan venture company called State Research respectively before 31 December 2018. Of The Asian Development Bank is extending Pavillon Financial Leasing (“SRPFL”) in this, US$3 million will be paid within three a loan to Yingda International Leasing, a the Peoples Republic of China. months of incorporation of SFPRL. Sino-foreign joint venture company with According to the Pavillon’s The investment in SRPFL will reportedly a strong track record in healthcare leasing announcement, SRPFL is formed in a bid be funded through internal resources, and finance, of up to $75 million to help the firm to develop their financial leasing industry the transaction is not expected to have any expand badly needed funding for healthcare in China. Further, Pavillon noted that the material impact on Pavillon’s consolidated equipment and facilities in China. The ADB registered share capital of SRPFL is US$30 net tangible assets and earnings per share said the loan will support the provision of million. Pursuant to the JV agreement, for FY16. equipment and facilities for hospitals in the western and central regions of China, which fare worse than the country’s coastal Chinese lessor takes Saab ULEVs east. The loan has a tenor of five years, and he Chinese leasing company Panda in terms of the numbers of vehicles, but it the funds are to be used to lease modern TNew Energy Co Ltd has signed a deal is also an important step to implement our medical equipment. with National Electric Vehicle Sweden vision and new business plan. In the long (“NEVS”) to acquire 150,000 Saab 9-3 term, we want to provide our customers electric vehicles by the end of 2020. The with both sustainable products and agreement, worth around £8.07 billion, mobility services.” also includes 100,000 other EV products Ma Chao, chairman Panda New Energy, and services from companies associated to said, “We are very pleased to form a NEVS and its owners. It was announced cooperation with Nevs, a company with just days after NEVS revealed plans for a a rich innovation heritage and the right five-strong electric vehicle line-up. ability to fulfil our demands. Being in an Commenting on the deal, Stefan Tilk, emerging market for new energy vehicles, vice chairman NEVS, said, “This is a we are happy to find a partner who shares strategic collaboration for NEVS not only our commitment to the environment.”

3 february 2016 www.leasingworld.co.uk asia NEWS

> IN BRIEF Don’t try fiddling leases in Vietnam n Vietnam, the HCM City People’s Court Trading Co. Ltd., because according to the Hong Kong wants to Ihas handed down death penalties to two court’s verdict, in 2009 Hao colluded with be the next Dublin former executives, one a leasing executive, for Hai to sign blank financial leasing contracts Hong Kong wants to become a global player embezzling the equivalent of approximately to “lend” the embezzled amounts from in aviation finance, after eyeing the success $5.2 million and abuse of power while state to the construction company. of the established aircraft leasing hubs in running state leasing companies. In fact, Hao pocketed $3.3 million, and Singapore and Dublin. Mr Hao, former general director of the Hai pocketed $2 million. In many western Finance Leasing Company No 2 (ALC II), countries these amounts would look like Experts believe there is rising competition a subsidiary of the State-owned Agribank, chickenfeed, and anyway leasing scams in aerospace financing, as China is looking was sentenced to death for embezzling are seen as a victimless crime, money like becoming the world’s largest air travel $3.3 million equivalent from the sucked from a bank that’s got lots more market over the next two decades. China company and 20 years imprisonment for where that came from, or from foolish rich has announced that it would allow financial “intentionally violating State regulations individuals who should have known better. leasing firms inT ianjin’s free trade zone, on economic management, causing serious But this story from Ho Chi Minh City is a the centre of Chinese aircraft leasing, more consequences.” Ditto Mr Hai,, a former glimpse of the other side of the coin, where freedom to move capital across borders, chairman of Quang Vinh Construction and money matters. according to the official Xinhua News Agency. Aircraft leasing companies in China have been involved in more than $16 billion of financing since mid-2014. and just like car Aussie launches leasing leasing can make more profit than actually ussie Home Loans has diversified actively selling asset finance, but we’ve now making cars, aircraft leasing can be more Ainto asset finance, announcingformalised our offering and, importantly, profitable than the airlines themselves. partnerships with three of the four major integrated asset finance into our sales banks. The group’s new offering will software to make sure the application The sticking point, of course, is the tax cover property, equipment and transport process is quick, easy and seamless for our regimes that have made Dublin and leasing and purchases, as well as other brokers and customers. Singapore so attractive to aircraft lessors. commercial uses, with ANZ, Macquarie “Doing things better, smarter and more An asset finance and leasing expert from Bank, CBA and Westpac forming the efficiently is what we’re focused on so we Hong Kong, put it succinctly: “The main initial panel of lenders. can continue to help our brokers grow obstacle for a Hong Kong-based company CEO James Symond said asset finance even stronger, more profitable businesses.” leasing out an aircraft is that it is taxed will open even more doors for its The asset finance market in Australia on gross rental income rather than profits. 1,060-strong broker sales force. “Asset is now worth $42 billion, and brokers Lessors in Ireland and Singapore are not finance will help our brokers to diversify have around a 30 percent share, only able to claim for tax depreciation, but their product offering, create stickier according to Aussie. are also taxed at a more favorable rate.” customers and ultimately, continue to grow “That’s approximately a $14 billion the incredibly strong monthly settlement opportunity for our brokers,” Mr Symond China requires about $1 trillion worth of averages they are achieving, which can be said. “It’s a natural extension to our aircraft over the next 20 years and has under- upward of $6 million per month for our product portfolio of home loans, personal ordered by some 750 planes over the next 180 branded retail stores,” he said. “Many loans and insurance, and a no-brainer for decade, Domhnal Slattery, chief executive of our brokers are already accredited and our brokers.” officer of lessor Holdings Ltd., told Bloomberg Television on Monday, a day after China’s Bohai Leasing closed its $7.6 billion acquisition of Dublin-based Avolon. As part of that merger, Hong Kong Aviation Capital Pakistan: leasing needs promoting will be absorbed into the combined Avolon- peaking at a conference on non-bank banking finance sector was 5 percent at Bohai entity, leaving China Aircraft Leasing Sfinancial sector and capital markets the end of the last fiscal year. Group Holdings as the sole aircraft lessor in organised by the Securities and Exchange As opposed to traditional modes Hong Kong. Commission of Pakistan, in collaboration of bank financing, leasing offers an with United States Agency for International asset-based financing model in which Development, and addressing the leasing one rents property to another without session attendees, Orix Leasing Pakistan any collateral. Small and medium-size CEO, Teizoon Kisat, said the regulatory enterprises (“SMEs”) can particularly framework needs to be improved in order benefit from this sector, as financing is to grow the size of the leasing sector in based on a pay-as-you-earn model of cash the economy. Kisat said leasing should be flows, he added. popularised by creating awareness about USAID Mission Director John Groarke it among the public. said USAID will continue to work with There are nine leasing companies in the government to strengthen the financial Pakistan, with total assets amounting sector and increase private-sector access to Rs40 billion. Their share in the non- to finance.

4 february 2016 www.leasingworld.co.uk US NEWS

Top 10 US leasing trends in 2016 > IN BRIEF LFA, the US leasing association, is somewhat insulated (only about 7 Two new car leasing ideas Ehas forecast its Top 10 Equipment percent of US exports are shipped to At the 2016 Detroit Auto Show, Ford revealed Acquisition Trends for 2016. Although none China), US manufacturers will feel the two new programmes that could affect car of them are earth-shattering of particularly impact of reduced demand in China as leasing, one a car-sharing via group-leasing insightful, they do seem sensible, in the light well as its trading partners (e.g., Russia pilot for the main Ford brand, and a mileage- of the uncertain global environment, and and Japan). management function for Lincoln models. their presidential election race: 6.  Equipment investment will vary widely Set to begin next month in Austin, Texas, 1.  US investment in equipment and software by industry vertical. Look for some the Ford Credit Link pilot program will allow will hit a new high, but moderate in equipment verticals to be weak and growth as businesses hold back on others to gain momentum. Among groups of customers to lease a car together. spending. The equipment investment the underperforming equipment types Groups of three to six people will able to sign cycle has likely peaked and manufacturing are agriculture, mining and oilfield, up together for 24-month leases through weakness, global uncertainty, and low oil railroad, industrial and materials three Austin-area dealerships, and then prices that have discouraged businesses handling equipment. Medical divide use of the car among themselves. from spending will further moderate equipment, computers and software An onboard device and smartphone app investment growth rates. are strengthening and construction will be used to coordinate everything. 2.  End of zero interest rate policy will equipment should remain solid with an Through the app, members of these Ford spur other businesses, particularly improving housing sector. collectives will be able to reserve drive time, small businesses, to invest before rates 7.  Customer demand for greater flexibility communicate with each other, and check the go higher. After the first short-term and convenience will increase the use status of an account or vehicle. Audi launched interest rate increase in nearly 10 of non-standard financing agreements. a similar program in Sweden in 2014, called years, look for the Federal Reserve to Shifts in customer preferences for Audi Unite, it bundles all associated costs, act gradually to make additional rate managed services (bundling equipment, including fuel and maintenance, into a increases throughout the year. As a services, supplies and software), pay- monthly fee split among group members. result, businesses that may have been per-use leases and alternative financing Sweden was chosen by Audi because of its hesitant about spending—particularly will spur equipment finance companies small firms—may be more inclined to to find innovative ways to fill the perceived progressive attitudes. In the US pull the trigger to take advantage of demand. These deals won’t replace it is Austin, Texas that apparently has the still-low rates before they increase. standard leases, but will become a progressive attitudes. 3.  The growth of equipment acquired larger proportion of financings. Both Ford and Audi need customers through financing will increase solidly, 8.  Low oil prices will continue to impede willing to try something new, and urban but more slowly. In 2016, a projected energy investment. In 2016, global oil dwellers in particular are expected to be $1.627 trillion will be invested in plant, production will remain elevated due more receptive to an alternative to car equipment and software in the United to factors including improved U.S. oil ownership. Owning a car in a city can be States. Despite large volume and a industry efficiency and increased supply inconvenient, and often unnecessary given rising propensity to finance, the waning from China, Argentina and Iran. The the availability of public transport. replacement cycle and businesses’ result is likely to be sustained low oil continued hesitancy to expand will prices, which will continue to dampen slow the rate of growth. energy equipment investment. 4. Businesses will begin preparing for new 9.   Eyes will be on 2016 presidential lease accounting rules. After many years election for potential policy shifts. of anticipating the new lease accounting The potential outcomes of the 2016 standard and attendant uncertainty in presidential election and their related the marketplace, companies will move policy implications will give businesses The Lincoln mileage management function forward and prepare to adopt it. new factors to weigh when making is in the process of launching. Called 5. China’s economic woes will be a global their equipment acquisition plans. “Lincoln Miles” it will give current lease concern. A sharp slowdown in China’s 10. An increase in unexpected and customers credits of $100 to $1,000 for economy will be a threat to global damaging global events could influence unused miles, which can be applied to growth this year. While the US economy business investment decisions. new cars. Participants will be able to track their current mileage and see end-of-lease mileage estimates. It’s part of an effort by Lincoln’s finance arm to gather data US: Navy to lease 600 EVs on leasing habits; the carmaker believes he US Navy is continuing efforts to exploit facilities in San Diego, Point Loma and adding more flexibility to lease contracts Tclean energy by leasing up to 600 standard Coronado, Marine Corps bases at Mirarmar will make customers happier. electric vehicles for use at bases in San Diego and Camp Pendleton, as well as other and elsewhere across the southwest. The facilities in Southern California and Arizona. Naval Facilities Engineering Command office In August the Navy signed an agreement in San Diego issued a request for proposals, with San Diego-based Sempra to get a third and deliveries are expected to begin in August. of the electricity for bases in the Southwest The vehicles would used at Navy from solar power.

5 february 2016 www.leasingworld.co.uk european NEWS

> IN BRIEF Railpool takes E75m new locos ombardier Transportation will provide Switzerland-Italy-Netherlands-Belgium DLL sale rumours B18 Traxx Multi-System (“TMS”) corridor, and five more MS type locomotives It has been widely trailered in the Dutch and and Traxx AC Last Mile (“TACLM”) will operate on the Germany-Austria- international press that Rabobank Group is locomotives, worth E75m, to Munich- Belgium-Netherlands corridor. The in preliminary talks with banks, institutional based leasing company Railpool. remaining five TACLM locomotives will investors and private-equity firms that may bid Railpool’s locomotive fleet will total 183 be for use in Sweden and Norway. TACLM for its leasing unit, De Lage Landen International vehicles as a result, and mainly comprise locomotives have extra versatility as they can BV, in a sale that may fetch as much as E4.5 Bombardier supplied locomotives. operate for up to eight hours on un-electrified billion, according to various sources. Eight of the 18 are TMS type for use track, and Bombardier has already sold on the new, extended Germany-Austria- more than 100 of this type to Scandinavia. The transaction could be concluded in the second half of 2016, but apparently the banking group could be open to selling just parts of the leasing activities. Faced, as many Leaseurope launches giga-banks are, with having to cut assets estimated at E150 billion by 2020, driven by ever tougher European capital rules, selling off SME Roundtable the leasing operations is often one of the first easeurope is launching a series of ports of call for over-large banking groups. Lroundtable meetings across Europe to The objective observer may wonder why it discuss leasing as a key source of finance has taken Rabobank Group so long to get to for SMEs. The aim is to explore the this stage, but then its structure as an agri- national SME financing landscape and focused cooperative has only very recently improve the understanding of leasing as a valuable form of investment finance, as been harmonised into a single entity with well as identifying any potential obstacles one banking license and a common annual hindering its use by local SMEs and how report. Chairman Wiebe Draijer, a 50-year- these could be tackled at national and old former McKinsey & Co. partner who took ultimately European levels. up his first banking job in 2014, is planning This roundtable series marks the to cut 9,000 jobs at the bank over the next continuation of Leaseurope’s research Leon Dhaene, D-G Leaseurope three years. initiative on leasing to European SMEs. De Lage Landen, which finances cars, In 2011 and 2015, Oxford Economics roundtables, Leaseurope again contributes medical equipment and agricultural undertook two studies The Use of Leasing to the debate on SME access to finance equipment, reported net profit of €454 million Amongst European SMEs on behalf of and provides various SME stakeholders euros in 2014, according to its annual report. Leaseurope in order to better understand and policy makers with valuable evidence The subsidiary makes up almost a quarter of and quantify the importance of leasing to showing that leasing is a crucial form of the profit at Rabobank. this key segment. Through the national finance for SMEs.” SME roundtables, Leaseurope, together Enrico Duranti, Leaseurope’s with its Member Associations, intends to Chair and General Manager of Iccrea LeasePlan gets the OK explore the results in more detail at country BancaImpressa welcomed the initiative, The European Central Bank (the “ECB”) has level and to supplement the findings with saying, “Our industry has a clear role to issued a Declaration of No Objection for the qualitative insights from various SME play in facilitating SME access to finance Acquisition of LeasePlan by a consortium of stakeholders. The outcomes of these and I am pleased that ASSILEA took the long-term investors. The consortium includes discussions will be published as a series of opportunity to organise such a debate in Dutch pension fund service provider PGGM, national case studies/summary reports. Italy, where small businesses have been Danish pension fund ATP, GIC, Luxinva S.A., The first roundtable was held on 15 particularly hard-hit by the economic a wholly owned subsidiary of the Abu Dhabi December 2015 in Milan, organised by crisis and are in need of solutions to Investment Authority (ADIA) and investment Leaseurope’s Italian Member, ASSILEA. support their investment. We see that funds managed by TDR Capital LLP. Closing More roundtables in other European leasing is more popular amongst SMEs countries are foreseen in 2016. in those countries, where firms are of the transaction is still expected in Q1 2016. Leon Dhaene, Director General of better informed about the universal Leaseurope, stated, “Leasing to SMEs advantages of leasing and can access it remains a core focus area of Leaseurope’s through diversified distribution channels. research programme, which has been The vendor channel, i.e. the point of sale instrumental in building a comprehensive of the asset, is particularly important, dataset and gathering market intelligence providing one-stop shop for equipment on this key client segment for our industry. and finance. Moreover, lessors’ solid I believe leveraging the findings at business models tailored to small European level and acting locally through businesses, as well as increased offers for our Member Associations are equally small ticket items, are among the drivers important. By initiating these national of SMEs’ use of leasing.”

6 february 2016 www.leasingworld.co.uk feature China update for asset financiers Exciting times ahead are predicted for the Chinese financial leasing sector, with the impact of China’s new policies to boost financial leasing. Government support for the financial leasing sector in China is nothing new, with the 12th five-year plan (2011-2015) specifically identifying the sector as one of the most important industries in China for growth

he latest provisions to encourage a mantra to dispel all economic woes not foreign investment further just for China itself but also its neighbours Temphasised the government’s many of whom are suffering the effects of commitment to boosting the sector, the long decline in commodity prices. demonstrating its strategic importance to In his recent policy address CY Leung the Chinese economy. (the CEO in Hong Kong) mentioned it some 48 times. He also said, “The Government Background is formulating measures to develop Hong Notwithstanding the slowdown in the Kong into a centre for aerospace financing.” traditional industrial economy there Although the initiative to allow HK to remains a huge need for capital investment develop into an aircraft financing centre into the high-value technologically to rival Dublin, and to be competitive with advanced new industries. This new Nigel Ward the FTZs in China, has drivers of its own it economy is being driven by innovation is not wholly unrelated to the One Belt one in the private sector, and the Government historically dominated by SOEs. Road message or to the broader leasing recognises the need to deploy a broader The State Council also recognise that sector. Aviation has been a major consumer range of financial instruments to ensure it SMEs have had limited access to public of leasing products – both for finance and receives the funding that it needs. Leasing sector sources of funding and they have operating leases – and is seen as one of the of high-value equipment is expected to often resorted to unofficial and poorly key investment sectors and beneficiaries of become the main entry point for financial regulated pools of private capital. The the policy – more travel, more destinations, leasing in the private sector. new guidelines give the major financial more aircraft, more infrastructure, more institutions yet another push to open up connectivity etc. All of which is consistent Reforms to SMEs and the private sector, specifically with the move to a consumer driven The reforms include promoting the through leasing structures, a tool that is domestic Chinese economy whilst also development of the existing domestic and well suited to undercapitalised companies giving impetus to building out the physical international financial leasing companies with strong cash flows in promising and virtual environments for consumers to by (i) guiding investment into the sector by sectors of the new economy. engage with. social funds such as pensions, (ii) growing In the longer term, Chinese public sector the leasing market outside of the traditional Real estate and infrastructure financial institutions will be required areas of focus such as aviation and shipping Chinese pension and life insurance to participate in providing the capital and expanding into new generation IT and companies are also looking to invest in to support the “One Belt One Road” environmentally friendly equipment, (iii) long life assets, which give stable returns. initiative and they will need to find a range encouraging more cross-border leasing, by The leasing sector is a natural extension of products which allow them to do so. investing in international enterprises and of this, with an established record in Both financial and operating leasing will (iv) making use of online technologies in providing both the asset type and level of be part of the mix. The timing of the issue order to improve the existing services of risk/reward. Having gone into commercial of the two new guidelines on the leasing leasing companies. real estate at home and abroad the Chinese sector is not accidental and not unrelated insurance/pension sectors are now being to the desire of the authorities to have the Importance of SMEs encouraged to turn their very considerable financial leasing sector develop so that it The August and September 2015 long term funds to invest in industrial can support the initiative. guidelines promote a focus on SMEs in and commercial/consumer assets at the domestic market. These guidelines home. Leasing structures provide an ideal Energy and Aviation recognise a number of reforms needed (and familiar) vehicle for this – property Aviation has been a major consumer of by the sector but are designed so that by ownership and stable income flows over leasing products – both for finance and 2020, financial leasing becomes a key relatively long tenors. For example, Ping operating leases – and is seen as one of the product for investment in equipment and An, amongst other insurance companies, key investment sectors and beneficiaries of technology by SMEs is looking to invest in the leasing sector the policy – more travel, more destinations, SMEs have been instrumental in (particularly aviation). more aircraft, more infrastructure, more creating employment and driving The Financial leasing sector is also connectivity etc. All of which is consistent innovation in the domestic economy and closely connected with supporting with the move to a consumer driven the guidelines proposed by the General infrastructure projects with the tag line domestic Chinese economy whilst also Office of the State Council focus on SMEs “One Belt One Road” being now so much giving impetus to building out the physical not only recognise their contribution but part of any commentary on the PRC and virtual environments for consumers to also ensures they are involved in a sector that it has taken on the aura of a being engage with.

7 february 2016 www.leasingworld.co.uk feature

Chinese public sector financial as a centre for financial leasing particularly institutions will be required to participate in the aviation and maritime sectors. The in providing the capital to support the authorities there have recently announced One belt one Road initiative and they will an intention to further liberate the capital need to find a range of products which account by allowing use of renminbi in allow them to do so. Both financial and cross-border transactions. operating leasing will be part of the mix. Initiatives to assist entrants to the The timing of the issue of the two new financial leasing market need to be guidelines on the leasing sector is not taken at both the central level (with accidental and not unrelated to the desire more regulatory clarity and streamlined of the authorities to have the financial administration of eligible institutions) leasing sector develop so that it can and provincial/local level – subsidies, tax support the initiative. Simon Spells breaks and other business incentives. This may take time but the willingness to allow Ensuring cash flows the sector to grow significantly is clearly Even if the encouragement given by on the eastern seaboard has allowed the announced by the guidelines. n the guidelines targets local players in authorities to run controlled schemes the domestic market the importance of to encourage cross-border (in and out) Nigel Ward is a Partner based in Hong Kong repatriating funds held off-shore and investments and to free up movements on ([email protected]), and Simon Spells encouraging foreign sources of capital the capital account and FX operations. is a Senior Associate based in Singapore into the local market has not been ignored. For example, the FTZ in Tianjin has been ([email protected]), in the Asset The development of FTZs in major cities particularly successful in developing itself Finance team at Berwin Leighton Paisner. Prevention of fraud in Leasing Allan Foad comments on Leaseurope’s recent Fraud Prevention seminar in Brussels

he Institute of Fraud Auditors (“IFA”) audited accounts. These checks should be counterparty the greater the risk of fraud. is the federation of fraud auditors in continued periodically throughout the term Every effort should be made to TBelgium, and one of its guidelines of a relationship and warning signs should corroborate the price being paid for the addresses fraud in Leasing & Asset be investigated. Additionally, payment equipment. With so much information Finance. None of the points made are new behaviour should be monitored on an on- available on line these days this is not as or rocket science but they bear repeating. going basis using one of the agencies that difficult as it once was and official price lists The IFA identifies four prime areas of provides this information. should be scrutinised. In sale and leasebacks fraud in asset finance Share registers should also be reviewed original invoices should be requested. • a fictitious asset where the asset being regularly for businesses more substantial To avoid dealing with sham companies financed does not exist leaving the than sole traders. Sometimes warning that will disappear after assets have been finance company unsecured in the event flags can be posted on registers to let purchased, the IFA recommends finance of a default, interested parties know of changes to companies to only deal with counterparties • a false price where the price of the asset is ownership. Existing shareholders selling that have a proven minimum annual inflated to enable the borrower to raise their interests could mean that a company turnover and a significant number of as much funding as he can which leaves is in trouble. New shareholders could employees. This provides some comfort the finance company under-secured in mean that the culture of a business is that the counterparty has substance. the event of a default, about to change or it will be taken into a As a matter of good practice a finance • double financing where a single asset different direction. Whatever the situation company should set limits on the amount is subject to more than one financing it should be investigated. of business it is prepared to transact with agreement. In a default, this can lead to Preferably, financed equipment should specific counterparties to avoid dangerous contentious situations between financiers always be delivered to the customer’s concentrations of risks. The IFA warns and only one can ultimately own the asset, premises. Great care should be taken against being attracted to companies out- • maintenance fraud where maintenance if a different address is requested and performing the market without being costs are inflated and the finance payment should be withheld until it has satisfied that there is good reason for their company spends more than it need. been proved that the equipment has been success. Too often these companies are over- To combat the above the IFA’s first rule installed and is operating. trading and resort to fraud to compensate is to know your counterparty whether this If it is not possible to physically visit for a shortage of capital. The IFA’s advice is is a customer, supplier or vendor. Personal the customer and view the equipment, to develop relationships gradually and not relationships are good but they must be evidence should be requested to prove that to rush into every deal on offer. underpinned by sound homework and it exists. Photographs are one suggestion Lastly, if possible, the IFA encourages nothing should be taken at face value. but these are easily falsified and they finance companies to share information Proper background checks should be made should be substantiated somehow. The IFA with others in the market. It advocates before a relationship is consummated and recommends that finance companies only networking and compiling blacklists to these should include credit checks and deal with counterparties within a radius of make life as difficult as possible for the bank references as well as an analysis of 100km. Data suggests that the remoter the fraudsters. n

8 february 2016 www.leasingworld.co.uk feature IASB chief comments on Leases standard Hans Hoogervorst, Chairman, IASB talked about the new IFRS 9 and Leases standards as part of his introductory comments to the European Parliament in Brussels

e stated, “First some words on IFRS of finance. It will remain appealing to 9. The introduction of an expected companies to lease assets so that they Hloss model for credit losses is the do not bear the risks of owning them. most important element of change in the While the cosmetic accounting benefits Standard. Most constituents in Europe of leasing will disappear, the real business and around the world see this new model benefits of leasing will not change as a as a big improvement. It will lead to a result of the new Standard. more timely recognition of inevitable “We do not deny there will be losses and will make it much more costs involved in updating systems to difficult for banks to hide problem loans implement the new Leases Standard, but on their balance sheets. At the same time, we have done our best to keep these costs it does not go overboard by requiring to a minimum. For example, we are not banks to book big up-front losses when requiring companies to recognise assets no losses have occurred yet. This would and liabilities for short term and small discourage banks from making longer- ticket leases. This should be especially term loans. beneficial for smaller companies. “IFRS 9 has been assessed as “In sum, we expect the benefits of the contributing to financial stability, in new Leases Standard to greatly outweigh particular by the ECB and EBA, and in its costs. The new visibility of all leases this it responds to the G20 requests. It has Hans Hoogervorst will lead to better informed investment also been regarded as positive for investor decisions by investors, and to more protection by ESMA. I am also convinced deceptively lean balance sheets. In fact, balanced lease-versus-buy decisions that the Standard will contribute to their off balance sheet lease liabilities by management. IFRS 16 will lead to economic growth, because banks will be were up to 66 times greater than the debt improved capital allocation, which should forced to clean up their loans to zombie reported on their balance sheet. be beneficial for economic growth. companies quicker. This should allow “Moreover, the current accounting for “In 2016 we also expect to publish a new credit to flow to more healthy companies leases leads to a lack of comparability. An version of the Conceptual Framework, with growth opportunities. For all these airline that leases most of its aircraft fleet which is the body of overarching reasons we think IFRS 9 is consistent looks very different from its competitor principles that guides our standard- with European demands for a safer, more that bought most of its fleet, even when setting. Among the many important resilient financial system. in reality their financing obligations may issues that we raise in the Conceptual “Secondly, I would like to make some be very similar. There is no level playing Framework, two are of particular interest comments about our upcoming Leases field between these companies. to many European stakeholders, namely Standard, which we will publish the day “These problems will be resolved in Prudence and Stewardship. after tomorrow [January 13th, 2016]. the upcoming Leases Standard. All leases “It looks likely that we will reintroduce Currently, listed companies around the will be recognised as assets and liabilities Prudence in our Conceptual Framework. world have around 3 trillion euros’ worth by lessees. The accounting will better We have defined it as the exercise of of leases, especially in sectors such as reflect the underlying economics. This caution under conditions of uncertainty. the airline industry, retail and shipping. change is expected to affect roughly We believe this is an important principle Under current accounting requirements, half of all listed companies and will not that should discourage overstatement of over 85 percent of these leases are labelled be popular with everyone. Accounting profits and understatement of liabilities. as operating leases, and are not recorded changes are often controversial and “We will also give a more central on the balance sheet. can be met with warnings of adverse place to the concept of Stewardship. We “Clearly, the accounting today does economic effects and costs of system will make clearer that the objective of not reflect economic reality. Despite changes. The IASB has looked at all these financial reporting is not only to help operating leases being off balance sheet, possible risks very carefully and we will market participants estimate future there can be no doubt that they create publish a detailed effect analysis on the cash flows. Financial reporting should real liabilities. During the financial crisis, Standard. Our conclusion is that the risks also help them to assess management’s some major retail chains went bankrupt and costs of the new Leases Standard are stewardship of a company’s resources. because they were unable to adjust manageable. Holding management to account is a quickly to the new economic reality. They “First of all, IFRS 16 will not put the core goal of accounting standards and we had significant long-term operating lease leasing industry out of business. Leases will make that clearer in our Conceptual commitments on their stores, and yet had will remain attractive as a flexible source Framework.” n

9 february 2016 www.leasingworld.co.uk basel NEWS

> IN BRIEF Is Basel III responsible

Basel hope for for choking SME growth? smaller banks? The Basel Committee on Banking Supervision Conrad Ford – Managing Director, Funding Options, writes: has issued a Second consultative document on Revisions to the Standardised Approach he Basel III accords set out a far stricter and perhaps even avoiding future financial for credit risk, inviting comments by 11 Tregulatory capital framework for banks, crises, its effects on lending to small March 2016. One of its proposals is for those to increase the resilience of the global businesses are generally expected to be using the standardised approach to apply financial system after the unprecedented disproportionately negative.” a lower risk weight of 85% for exposures events of the 2008 credit crunch. At the While contemporary opinion to SMEs. The Committee intends to collect time Basel III was debated, a number of anticipated problems for SMEs, nobody evidence during the consultation to assess technical commenters expressed concerns really knew what would happen that it could overcorrect the mistakes specifically. In the same report, the ACCA whether such preferential risk weight is of its discredited predecessor Basel II, in admitted, “Policymakers still know little warranted. Some respondents noted that a particular by being punitive on lending to about the potential impact of Basel III on lower risk weight may be justified for SME small firms, which are often described as lending to SMEs” – in 2015, the impact is exposures due to the following reasons: the engine room of economic growth. becoming clearer. • Unrecognised collateral: SMEs typically Now, a few years on from Basel III, in provide more physical collateral than other our white paper “Small business finance: A capital offense large corporates. This collateral, despite not Life after the overdraft,” we have carried Basel III’s capital constraints have led being recognised under the SA’s credit risk out a UK survey to see if Basel III is indeed to a few unintended but predictable mitigation framework, may offer protection showing a negative impact. Worryingly, we consequences for SMEs. On one hand, against credit losses and result in lower have found that, in the UK at least, bank new capital requirements might have average losses given default compared to overdrafts to small firms are indeed falling encouraged the banks to acquire more other large corporate exposures. at a dramatic rate, with severe knock-on capital to sustain the same level of risk effects for SMEs all over the country. The – but on the other hand, they could also • Low correlation: The IRB approach also UK is fortunate to be perhaps second only choose to reduce their lending to retain the includes a firm size adjustment for SME to the USA in terms of the diversity and same level of capital. exposures to reflect the lower asset value maturity of its alternative finance market, For large institutions looking to reduce correlation, which results in lower risk which has likely cushioned the effects of their exposure rather than find more weights for such exposures. this withdrawal of bank lending to SMEs. capital, SME lending is the obvious area • At the same time, banks using the internal Our findings could have far-reaching to be reduced – it’s generally higher risk, approach may find a floor placed on the implications for those parts of the world lower return, and requires significant weights that may be applied. that don’t have the luxury of an equally resources to process each case. Basel III diverse alternative finance market to has encouraged the banks to turn down cushion the blow of Basel III and its effect risky propositions, and take a one-size-fits- Islamic banks & Basel III on bank lending. all approach – so in turn, bank lending to No conflict with Basel III is foreseen, SMEs has been hugely reduced. although there can be some challenges A hazy future in Basel III implementation for Islamic While Basel III introduced a number The opportunity for Alternative banks. Islamic banks operate in line with of revisions to its predecessor, one Finance (“AltFi”) principles which prohibit payment and key difference is capital requirements. receipt of interest therefore Islamic banks Compared to Basel II, Basel III requires With the rise of alternative finance, would predominantly rely on Tier 1 capital banks to hold more capital – often there are many other options out there rather than interest-bearing, Tier 2 financial twice as much. Generally, holding more for rejected businesses. The trouble is, instruments. So compliance with the stricter capital in readiness for stress is wise at a businesses turned down by the banks often macroeconomic level, particularly in the don’t know about or don’t understand the Basel III norms for capital would perhaps be wake of the financial crisis. options open to them, and the most likely more challenging for conventional banks, However, while appearing sensible on a outcome is they give up. Access to lending which have a mix of Tier 1 and Tier 2 capital. global macroeconomic scale, such measures is a strong predictor for growth, so even the were clearly not ideal for SMEs. Indeed, businesses that survive a lack of funding at the time that the Basel III accords were are being starved of the opportunity to formulated, contemporary commentators grow and innovate. such as the ACCA, a prominent global Our research shows there’s still a huge accountancy body, anticipated negative knowledge gap, and many business consequences forSMEs, noting in July owners simply don’t know about the 2011 that: options available, don’t understand them, “…the credit crunch and economic struggle to access them, or all three. While slowdown that followed it have hit smaller the in-vogue P2P lending (crowdfunding) enterprises hard. Although Basel III is has gone some of the way to increasing often described as a recipe for mitigating awareness of alternative finance, it

10 february 2016 www.leasingworld.co.uk basel NEWS

> IN BRIEF represents a fraction of the market in terms finance, including: small business owners of lending volume, and while perfect for themselves; their trusted advisors like some firms, it don’t work for many others. accountants or business mentors; and Asia: India’s state banks mainstream banks, alternative lenders, and prepare for Basel III What can be done to solve marketplaces alike. According to a report by Fitch Ratings, Indian In the UK, alternative finance is already banks need $140 billion capital to ensure the problems of Basel III? matching 45 percent of the volume of bank full compliance with Basel-III norms by In the UK, government initiatives lending, a much better situation than just a 2018-19. State Bank of India (“SBI”), whose like a bank referral scheme, whereby few years ago, but with the right measures, catchphrase is “The banker to every Indian” businesses turned down for finance will we can close the knowledge gap entirely says it will sell (“monetise”) non-core assets be signposted to alternative providers, and make ‘alternative’ lending well and and list some of its subsidiaries for meeting show that policymakers have recognised truly mainstream. If that future is realised, capital needs as well as global risk norm – this knowledge gap exists and needs to the effects of Basel III will no longer be felt Basel III – which will kick in from March 2019. be addressed. As well as the government, so painfully by SMEs all over the world. there is a variety of stakeholders who The bank has already announced plans all need to play a part in improving By Conrad Ford, Chief Executive, Funding to lower its stake in insurance ventures. SME understanding of alternative Options. A bank spokesperson emphasised that meeting Basel III requirement is going to be a challenge. “It is a challenge because India is basically capital starved. On top of that, you Basel Revised Boundary report need capital to grow. And to compound all of evised Boundary: The regulator well as “a revised standardised approach this, you (have) regulatory requirements on Rapproved new market-risk rules, that serves as a credible fall-back and keeping capital at higher level than Basel.” known as the “Fundamental review of floor to the model-based approach, and She added, “Basel template as it was the trading book,” that take effect in facilitates more consistent and comparable created was really and truly not meant for 2019. Improvements include a “revised reporting of market risk across banks and a country like India which has plain vanilla boundary between the banking and jurisdictions,” Basel said. banking.” The Basel people have, of course, trading books that will reduce scope Stefan Ingves, chairman of the Basel heard all this before. for arbitrage,” and a “revised internal Committee, stated, “Finalising the new models approach with more coherent and market-risk framework represents an Other Indian banks are also making their comprehensive risk capture.” important milestone toward completing the moves, Vijaya Bank has decided to raise Basel The new rules, soon to be published, will Basel III reforms. The committee expects to III Compliant Tier -II Bonds amounting to Rs also feature “an enhanced model-approval publish further details of proposed revisions 500 crore by way of private placement. The process and more prudent recognition of to the risk-weighted assets framework bank has received ratings of ‘AA+ (hyb)’ with hedging and portfolio diversification,” as following its March meeting.” stable outlook by ICRA and ‘AA+’ by CARE for the proposed issue of the said bonds. Bank of Maharashtra has informed the BSE that the bank is proposing to raise Basel IV? Basel III compliant tier-II bonds amounting lobal banking regulators pledged to still ahead, even after the last decade of to Rs 1,000 crore by way of private/public Grefrain from further tightening capital new rules designed to prevent another placement,” the public sector bank said in a requirements with new rules to be finalised market meltdown. regulatory filing. in 2016, dispelling industry fears that Basel group’s latest statement may be triggered intense lobbying efforts over the watered down in response to bankers’ Public sector United Bank of India (“UBI”) past year. warnings, and indicates downplaying plans to raise up to Rs 1,000 crore by The Basel Committee on Banking of a possible ‘Basel IV’ rule, putting issuing securities. These subordinated, non- Supervision now says it doesn’t plan to raise changes forward as recalibration rather convertible, non-cumulative, listed, Basel-III capital requirements across the board in the than revolution. compliant additional tier one bonds will be remaining projects of its post-crisis bank As part of this process, the regulator will in the form of debenture or promissory notes rule overhaul, “The committee will conduct hold a public consultation on removing that is to be included in its additional tier a quantitative impact assessment during internal-model approaches for some one capital for the purpose of ascertaining the year, as a result of this assessment, the risks, such as the Advanced Measurement the capital adequacy ratios. The Reserve committee will focus on not significantly Approach for operational risk, as well Bank began implementing Basel-III norms increasing overall capital requirements.” as on “setting additional constraints on in phases from 2013, which are to be fully Basel’s list of rules for this year, the use of internal model approaches for complied by the banks within March 2019. including a review of trading risks that the credit risk, in particular through the use committee endorsed on Jan. 10, have faced of floors.” heavy criticism from bankers, who say The committee also sounded a soft note onerous new capital charges would crimp on another lingering worry of bankers, the their ability to lend. The overhaul of how unweighted leverage ratio. It will keep the banks value risky assets has led industry minimum amount of capital per total assets executives to warn a regulatory onslaught unchanged at 3 percent, when it becomes a — sometimes referred to as Basel IV — is binding requirement in 2018, it said.

11 february 2016 www.leasingworld.co.uk UK NEWS

> IN BRIEF News title here aircraft leasing

Aeroflot absorbs bankrupt Transaero developments and insurance applications, along with legal Aeroflot will receive 34 Transaero aircraft, after Transaero went implications. Students will also develop the knowledge and into bankruptcy at the end of 2015. The first planes will come skills (both professional and personal) necessary for a career in across in March 2016, and Aeroflot CEO Vitaly Saveliev stated, the aircraft and airline financing industry. “We concluded a lease agreement with our leasing companies - How much does it cost? E16,150 for EU students, E20,900 for Sberbank Leasing, VTB-Leasing and VEB-Leasing - to receive non-EU. Sounds a snip considering the future earning potential. Transaero aircraft for our fleet. 34 aircraft, including long- You can watch Tim Myers, VP & GM Boeing Aircraft Finance, haul, which are now undergoing maintenance.” The transfer talking through the exciting challenges of the aviation leasing of aircraft as well as personnel seems to be going smoothly as industry on the Smurfit GBS website, well worth a visit. the flagship airline absorbs its erstwhile rival. Aeroflot Group is reported to have opened up more than 6,000 vacancies for Macquarie AirFinance eyeing sale? Transaero personnel while more than 2,000 former employees Aircraft leasing pundits are wondering out loud that Macquarie of the airline dissolved last year, already work in Aeroflot. Group’s AirFinance division, boosted substantially last year by the $US4 billion acquisition of an portfolio from AerCap places 737s with Czech airline AWAS Aviation, could potentially be ripe for a float or sale in AerCap Holdings N.V. (“AerCap”) has placed ten Boeing 737 the next 12-24 months, according to The Australian Financial MAX 8 aircraft from its order book to Travel Service, a long- Review. expert eyes will be closely monitoring planned floats term customer and the Czech Republic’s biggest airline company. of BOC Aviation, CDB Leasing and Bank of China’s aircraft Overall, AerCap 100 737 MAXs on order, and is Boeing’s leasing unit in Asia over coming months. second largest lessor customer in the 737 MAX program. AerCap is thought to have one of the most attractive order Boeing Capital’s view books in the industry, holding top customer positions across Boeing Capital Corporation (“BCC”), in a report issued in all modern technology aircraft, including large orders for the December 2015 entitled 2016 Current Aircraft Finance Market Boeing 737 MAX 8, the Boeing 787 Dreamliner, the Airbus Outlook forecasts continued strength in the primary aircraft A350, and the Airbus A320neo family. finance sectors, with a growing number of market participants “We leased our first 737 to Travel Service in 2000,” and a steady trend toward more funding options at attractive AerCap President & Chief Commercial Officer Philip Scruggs pricing for buyers of commercial aircraft. Underpinned was reported as saying. “Over the past 16 years, the airline by strong commercial aviation industry fundamentals and has grown into a regional leader in the Czech Republic and bolstered by interest from both new and experienced financiers Central European aviation. These 737 MAXs will renew and and investors, it believes the aircraft finance industry is well- expand Travel Service’s fleet and ensure its leadership over the positioned for another successful year. next decade.” In 2016, BCC anticipates that the industry will provide funding for approximately $127 billion in new commercial A small community, a very big business aircraft deliveries, with the capital markets and commercial How much does it cost to get into a highly paid career in leasing, banks accounting for approximately two-thirds of that total. that has a touch of glamour about it, and how might one go Much of the funding should flow to lessors, who are expected about it? Well, most would agree that aircraft leasing is a well- to support around 40 percent of new airplane deliveries. The paid area of leasing, it’s certainly a big business, forty percent depth and breadth of commercial market liquidity should of the global fleet operated by all airlines is leased, it certainly continue the trend of historically low usage of export credit. sounds more glamorous than leasing vans and photocopiers The sustaining strength of aircraft finance markets is driven to SMEs, so how does an aspiring leasing hopeful get into largely by healthy aviation industry fundamentals and balanced the business, surely it’s a closed shop run by greying leasing supply and demand for commercial aircraft. Air traffic is veterans? Well, greying leasing veterans don’t go on forever, and growing above long-term trends, airplane utilization and load the aircraft leasing business is suffering a shortage of new blood factors continue to rise, replacement demand remains strong, just like many other areas of leasing. and global airlines are producing record operating results and UCD Michael Smurfit Graduate Business School, in Blackrock, profits. As outlined in the Boeing Current Market Outlook, these Dublin, has launched an MSc in Aviation Finance, promising its dynamics should result in annual airplane demand increasing students that they will acquire a detailed understanding of the 35 to 40 percent over the next decade. The air cargo recovery financial processes and procedures associated with the aviation slowed in 2015 with a decline in world trade growth. However, finance sector including suitable risk assessment and aircraft the long-term outlook for air cargo demand remains strong due valuation, relevant accounting and taxation issues, leasing to faster growth among developed economies and the expanding

12 february 2016 www.leasingworld.co.uk aircraft leasing

networks of Sixth Freedom carriers. Hong Kong and Shanghai, Avolon provides aircraft leasing and These trends should help drive a return to capacity balance lease management services, and is a wholly-owned, indirect and boost demand for new, fuel efficient freighters. In this subsidiary of Bohai Leasing, a Chinese public company listed period of record backlogs and rising delivery rates, some market on the Shenzhen Stock Exchange. As of December 31, 2015, sentiment is focused on a potential imbalance between capacity Avolon´s owned, managed and committed fleet, together with and demand. BCC acknowledges these views and remain vigilant the Hong Kong Aviation Capital fleet, comprised 418 aircraft in ensuring that its production plans reflect market realities. All with an average owned aircraft age of 3.2 years. objective measures show that currently there is a tight aircraft supply market, and BCC’s planned delivery rates as a share of A380 Voted best aircraft type the installed fleet are in line with historical norms. by Global Traveler readers Overall, the aircraft finance outlook for 2016 is a positive one. BCC expects the industry to continue developing new markets and structures, enabling even broader financier and investor participation in aviation, and resulting in greater efficiency for airlines and lessors. In particular, BCC sees increasing momentum behind lessor portfolio sell-down into the capital markets, and the development of regional private placement markets. Standardizing these structures to enable their usage by a broader set of borrowers, financiers, and investors should be an important area of focus for all market participants.

Russian planes gain foothold Air France-KLM, intends to wet lease Russian-made Sukhoi Superjet 100 (“SSJ100”) aircraft this May, Gazeta.ru reports, quoting a source close to the negotiations. In October, Irish regional airline CityJet announced that it had chosen the SSJ100 to enhance its fleet and network development program. The company placed an order for 15 of the Russian-made aircraft with an option to buy 10 more. Air France intends to wet lease some of these jets from CityJet (until 2014, CityJet was a subsidiary of Air France). According to Sukhoi there are 64 operational SSJ-100 aircraft in the world. The biggest users are Aeroflot Mexican airline Interjet.

Air Lease Corp overweight? Air Lease Corp (NYSE:AL) stock had its “overweight” rating reissued by investment analysts at Morgan Stanley in a recent research note. The company has a market capitalization of $2.51 billion and a price-to-earnings ratio of 11.00. Air Lease Corp has a one year low of $22.91 and a one year high of $40.49. The company’s 50-day moving average price is $28.45 and its 200-day moving average price is $32.04. Air Lease Corp Iran airlines to lease last released quarterly earnings results in November 2015. On Dubai Aerospace Enterprise (“DAE”) expects to add 30-35 average, equities research analysts predict that Air Lease Corp planes to its current portfolio of 97 with significant demand will post $2.75 earnings per share for the current year. seen coming from Iran. Avolon, the international aircraft leasing company, Iran has agreed with European manufacturers last month to has delivered an Airbus A330-300 aircraft to Garuda purchase up to 158 aircraft but these could take a few years to Indonesia. This delivery is Avolon’s sixth aircraft on lease to be delivered. It is thought that Iranian airlines will be looking Garuda Indonesia. to lease aircraft that are immediately available while they await With offices in the Ireland, United States, Dubai, Singapore, the European deliveries.

13 february 2016 www.leasingworld.co.uk SYSTEMS ETC

News and views of IT systems, software, and operations topics in the asset finance industry NetSol Technologies in $100 Cassiopae in Top 100 FinTechs Cassiopae has been included as one of the top 100 million-plus contract financial technology providers in two key industry NetSol Technologies, Inc. has announced the signing of rankings. American Banker and BAI announced that a contract currently valued at more than $100 million, Cassiopae is No. 79 on the annual FinTech Forward™ Top which includes licence, maintenance, services and 100 Companies list, which ranks the leading technology expected customization, with a long-standing customer, vendors to the financial services industry. to implement NFS AscentTM. IDC Financial Insights announced that Cassiopae is No. 89 in the The agreement calls for upgrading to NetSol’s NFS Ascent 2015 IDC Financial Insights FinTech Rankings, which evaluates platform, the company’s advanced solution for the auto and the revenues of leading global technology and services providers equipment finance and leasing industry, from the company’s to the financial industry. NFSTM platform in Australia, China, Hong Kong, India, Japan, Commenting on the recent rankings, Cassiopae CEO New Zealand, Singapore, South Korea, Taiwan, Thailand Emmanuel Gillet said, “Over the last 27 years, Cassiopae has and Malaysia. The contract also includes implementation of worked hard to build a strong product and an even stronger NFS Ascent in South Africa, a new market for NetSol. The network of satisfied customers. The industry recognition we have implementation phase spans a five-year period, with maintenance achieved is a testament to the hard work of every individual at and support over ten years. Cassiopae and to our company as a whole.” “This is a transformative agreement for NetSol, representing This year the FinTech Forward™ Top 100 Companies list also the largest contract in the company’s history, and a strong features Sungard, Temenos Group, and Linedata Services. endorsement for NFS Ascent from a nearly two-decade-long Cassiopae also recently reported that Rivieres Finance Limited partnership with our client,” said Najeeb Ghauri, CEO of in Kenya has implemented Cassiopae’s front-to-back leasing NetSol. “The agreement also reflects their trust in NetSol and our software. The project was completed in less than three months. talented technology professionals. The significant investments Founded in 2013, Rivieres Finance Limited is a member of the we made in our infrastructure and staffing are paying off and Chase Group of companies and a leading leasing company in building leverage into our business.” Kenya. The company selected Cassiopae software to support its The implementation encompasses the full end-to-end finance growth both locally and throughout Africa. and leasing lifecycle, covering NFS Ascent’s Loan Origination “Cassiopae leasing software has all of our must-have features, System (LOS), Contract Management System (CMS), Wholesale in a single solution, including a flexible architecture that easily Financing System (WFS) and its Dealer/Auditor Access System adapts to the specifics of the African business environment,” (DAAS). It also includes NFS MobilityTM mAccount, which said Ms. Jennifer Kinyoe, Chief Executive Officer for Rivieres gives customers visibility into their auto financing contract. Once Finance. “We value Cassiopae’s experience and their ability complete, the system will provide a single regional platform that to support our strategy of delivering innovative products and improves business visibility and assists with strategic planning. exceptional customer service. Looking ahead, we plan to scale “With the signing of this agreement, NFS Ascent has established the system according to the demands of the market, integrating itself as the premium auto and asset finance platform in the new products as we expand our size.” market,” said Naeem Ghauri, head of global sales for NetSol. Rivieres is currently using the Cassiopae solution to help “This is a watershed event for NetSol given the expected value of manage equipment and automotive leases. Cassiopae has the contract and geographical footprint of the implementation in numerous client sites in Africa including leasing companies 12 markets. In addition, we believe NFS Ascent is well-positioned and banks. “Our presence throughout Africa means we are in to leverage this success to sign additional multi-market deals in an excellent position to support companies looking to grow the future.” and expand across the continent,” said Jemil Ben Romdhane,

14 february 2016 www.leasingworld.co.uk systems

Managing Director of Cassiopae MEA headquartered in Tunis. Mobil’Ekip application are considering new approaches to “Our experience and the excellent relationship we developed developing their businesses. Initial feedback is very positive with the Rivieres team enabled us to work efficiently and achieve and we are accelerating our investments in this area. As user all of the project goals, including a very quick deployment.” paradigms and technologies change, it is Linedata’s role to be at our clients’ side to provide the right solutions,” says Alain Mattei, Global Head of Linedata Lending and Leasing. IDS Infolease 10® success “Linedata Mobil’Ekip is much more than a simple interface Successful launch of International Decision Systems, Inc. with Linedata Ekip360. It creates new ways of working that (“IDS”) InfoLease® 10 portfolio management software is a will soon be integrated into day-to-day operations. Mobile significant step in helping IDS client, ImageNet Consulting, applications will transform the way credit providers operate, and how they manage their customer relationships. Linedata is ahead LLC (“ImageNet”), achieve improved efficiencies and of these changes and allows our customers to become leaders streamlined performance to enable its future growth. in their markets,” adds Bertrand Cocagne, Product Manager InfoLease 10’s extensible web services capabilities was Lending and Leasing Europe. instrumental in ImageNet’s decision to upgrade its software. By supporting the development of financial institutions around The ability to push and pull data from its ERP system, in-house the world, Linedata has become a key global provider to the origination system and InfoLease is critical to its goal of achieving leasing and credit finance industries. With over 450 professionals real-time information and eliminating manual processes. specialised in these fields, Linedata meets the needs of more than ImageNet upgraded its solution to InfoLease 10 within 8 130 institutions in 35 countries. weeks and achieved rapid adoption by its staff. According to Rocky Frost, Vice President of Contracts at ImageNet, “Using InfoLease 10, we are integrating across our business for greater Puerto Rico client transparency and uniting each part of the revenue cycle for seamless financial performance. By helping to manage processes, takes SuperTRUMP InfoLease 10 assists us in streamlining steps along the lifecycle.” For over 30 years, SuperTRUMP lease and loan pricing “IDS is thrilled to have ImageNet live on InfoLease 10, as they software has set a standard for pricing and modelling join the ranks of customers of all sizes operating on the platform,” complex leases and loans, indeed for many leasing said Michael Campbell, CEO of IDS. “We’re pleased to see professionals it was the first lease pricing programme customers experiencing almost immediate gains in efficiency.” they ever used. Ivory Consulting Corporation announced today that Puerto Rio- Linedata launches Mobil’Ekip based Commercial Equipment Finance, Inc. (“CEFI”) has chosen Linedata, the global solutions provider for the investment Ivory Consulting’s SuperTRUMP as their pricing solution for equipment leases and loans. With SuperTRUMP, CEFI will gain management and credit industries, has announced the the efficiency necessary to meet their growing customer demand. launch of its digital Linedata Mobil’Ekip solution. “As a growing independent ,serving vendors and end-users, With this application, key tasks and information can be managed SuperTRUMP’s sophisticated and flexible calculation engine and accessed from mobile platforms, such as smartphones will support our continued growth,” said CEFI’s Ricardo Ríos and tablets. It operates in conjunction with the core Linedata Bolívar, Founder, Chief Executive Officer and President. Ekip360 system. Scott Thacker, CEO, Ivory Consulting Corporation, said, In response to rapidly evolving customer needs, lending “CEFI is our first customer located in Puerto Rico; we are excited professionals must become more connected and proactive to bring our pricing expertise to the Puerto Rican business with their clients, and also to increase productivity. Digital community. We look forward to supporting CEFI’s growth plans. applications, in particular via mobile platforms, provide practical We welcome CEFI to the Ivory family of lessors and congratulate answers to these challenges. them on being awarded Financial Institution of the Year by the Linedata Mobil’Ekip covers the entire value chain from sales Puerto Rico Product Association.” to operations and end-users. Rather than simply reproducing existing core features, Linedata Mobil’Ekip adds additional value with a completely new mobile experience accessed via Leaseteam adds account manager smartphones and tablets (IOS and Android). Users can directly LeaseTeam, Inc., a solution provider in the equipment scan and input business cards and exchange documents with leasing and finance marketplace, is pleased to decision-making platforms in real-time. Linedata Mobil’Ekip is announce the addition of Elizabeth Sheffer to its Account an integral part of the contract acquisition chain: a sales person can create a pricing proposal and immediately submit it to an Management team. assistant or a call centre for processing. Sheffer brings with her extensive experience working alongside Linedata Mobil’Ekip offers additional modules, such as debt clients to provide strategic recommendations, helping streamline collection, that allow transmission and real-time updates of business objectives and achieve goals throughout the software customer information. Once the application knows which client implementation process. the user is working with, relevant information will be made “We are very excited to bring Elizabeth on to our growing available in real-time. Account Management team,” said Bryan Hunt, director of sales “The recent major technical advances implemented in at LeaseTeam. “Her proven experience growing relationships Linedata Ekip360 allow us to support our clients in their digital and acting as a customer advocate will enable her to immediately transformation. Clients who are already testing our Linedata make an impact for our customers.”

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