The abfjournal recently listed the top 50 equipment leasing & financing companies by both portfolio size and by volume. I must admit I was a bit surprised to see that alongside the names of GE Capital, Banc of America, and Royal Bank of Scotland, were the names of six (6) of the TM Forum’s 700+ members.
The six captive financing arms (which included both US & non-US based firms) had leasing portfolios totaling more than $48 billion USD.
Although captive financing arms can provide a boost to top line sales in good times, like any other lending institution they are subject to making their share of bad loans as well. At some point those loans must be marked down and will negatively impact the parent company’s earnings. While new mark-to-market accounting rules try and force some transparency, the bad loans remain a time bomb on the balance sheet.
While the six Forum members in the top 50 have very sophisticated finance & risk management departments, I wonder as more and more vendors try and sell their way out of this recessionary period…are they adequately monitoring the risks they are taking with their own financing/leasing programs?
Posted
12-01-2009 10:29 PM
by
Jim Metzger