What will the New Year bring us?

It is at this time of year that people start to think what the new year will bring them, we all hope for better things, and that hope is what drives us all on.

Hope is a positive, but you have to look at the coming year in the hard light of reality. So lets get the bad news over first. I do not believe that in a years time, the eurozone will look the same, some members I expect would have left, or there will be a two tiered eurozone, possibly North & South. Only this morning, the European Central Bank have come up with yet another sticking plaster to the crisis, this is where the eurozone banks can borrow direct from the ECB to help them through the next 2- 3 years.

As the BBC's Business Editor Robert Peston puts it this morning "Because the whole reason that eurozone banks are perceived to be weak at the moment, and why commercial lenders are shunning them, is that these banks are seen to have excessive exposure to sovereign borrowers who may not be able to repay all they owe.
Or to put it another way, the ECB is taking a double solvency risk: on the solvency of the bank to which it lends and on the interconnected solvency of the sovereign standing behind said bank, and to which said commercial bank has lent "

This is a recipe for disaster for waiting for the eurozone down the road, how far down I have no idea, but at least you know that the light at the end of the tunnel is now a train.....!


That's the bad news over and done with, and now moving swiftly on with positive news, Asset based lending grew faster than any other form of lending in the third quarter of 2011. Total funding was £16bn in this period.
This included sale & leaseback & asset refinance, where companies can release tied in capital in equipment, for either expansion in new areas,a Plan B, or to cover irregular cash flow problems.

Another growth area which many people shun because of perceived problems is selling into the eurozone.This is a huge market opportunity which companies simply cannot ignore.The European vendor leasing area has seen Oak Leasing's largest growth over the last three years.We are able to arrange leasing in almost all of Europe in conjunction with our funding partners. This gives you the chance of using our expertise and experience to help you grow in these vital markets. And the best part is we make no charge, its free.

Decisions normally within 48 hours, and we handle all of the lease documentation in the language of your customers through the local offices of our european leasing partners. You have nothing to lose, but I would think a great deal to gain.

So as we look back over the year, it has been hard, perhaps harder than we all thought last January, but hope and opportunity is there for us all to seize in the New Year.

You heard this first here!

According to Reuters this morning,

"Italy holds the key to the euro zone debt crisis," BNP Paribas analyst Luigi Speranza wrote in a research note late on Thursday. "Developments in Italy are a crucial test for the credibility of the anti-crisis framework set up by the EU."  Concern is growing that Italy, the euro area's No. 3 economy and biggest government bond market, could go the way of Greece and require a bailout without rapid action.

The question is, what the the action be,  will this be a light trim, a short back and sides, or something else!

Watch this space !

The price of a haircut !

I am sure that  you would have noticed that  new word has emerged as a buzzword. It is of course a "haircut".

I am old enough to remember when a haircut was a short back & sides, enough to last for at least 6- 8 weeks. But a haircut now only lasts a few days in the financial world, before they all have to go again to discuss how to have another  hair cut!.  When a country cannot pay what is owes, it used to be called a default, but default is a naughty word and cannot be used, so they have come up with the word "haircut" which in laymans terms means the banks and lenders have to write off a percentage of what a country owes them, i.e. a default!

You may have also noticed that the Euro is in a spot of bother, France is saying how it saved the euro last Thursday, ( with help of course from Germany). But they never learn from history, doesn't the phrase beware of Greeks baring gifts ring any alarm bells? You could see by simply watching what is happening in Athens to realise that a  just "haircut" was not going to save Greece. 

They key fact to look out for is the price of Italian and Belgium bonds over the next few weeks. If the price of Italy's bonds rise over 7.00%, I think that the game is up for the Euro, it will purely be a matter of an orderly default. ( note the word default, not a "haircut" !)

So there you have it in a nutshell,  the Euro problems are down to the cost of a haircut, it used to be two bob, but it appears to be very expensive now.

The other news is that the UK economy is growing, up to .5%, whilst German latest growth figures are.1%.I am aware they the figures are low, but to think we are ahead of the German powerhouse economy is not to be sniffed at! And on that note, I will simply say that Oak is funding more companies than ever before, from start ups, to company refinancing, to straight forward leasing. I will leave you with a post it note to keep on your desktop.

Deja- Vu? or Here we go again!

Here we are again, as if we have never left, the headlines are the same as 2008, banks in trouble, blah blah blah.

What I find amazing is that this could have been averted almost a year ago if the the European Central Bank had acted decisively when the Greek crisis emerged. Instead of action, they fudged and fumbled along, national issues taking precedent over European issues, and by using sticking plasters instead of life saving surgery. Amazingly, the patient simply got worse.

The fear of a Greek default, ( which is now almost certain to occur) has created a liquidity squeeze on most European banks. Dexia is just the first of many that will require funding According to the FT, the figure of €200 billion is just enough to cover the provision against debt by Portugal, Ireland & Greece. That beggers the question of how about Spain, Italy & Belgium? Does the ECB have enough firepower, and crucially political will  to sort this whole question out?

According to newspaper reports, banks in  Germany, Italy & France are looking at shortfalls. This will simply increase the liquidity squeeze, and that will affect all of us.

So we all wait until the next Euro Summit, when all will be revealed, and the Germans & French will have saved the Euro, and the Euro Zone, but don't hold your breath !

That is the bad news, however, the UK is still moving forward, Just, I know but still forward. We can either say as Frazer in Dad's Army say "we are all doomed", or we see what is actual happening, franchisee's are expanding, opening more outlets, they know to stand still is really to go backwards. At Oak Leasing we are very active in our support for new start business, and are always willing to assist also  established business in expanding and even to help  establish new & valuable credit lines for those companies whose banks are simply moving away from their customers.

Come and visit us at www.oaklease.co.uk, and see how we can help you grow in the face of challenges, both in the UK & Europe

A country in Europe Beginning with the letter G

Way back in June, I stated that it was purely a matter of time when Greece would leave the Euro, not if she would leave the Euro. Everyone's attention is firmly on Greece, and her financial woes. Greece is history now ( no pun intended) the country we should look at is Germany, for only she has the financial clout to save Greece & the Euro .


And there lies the underlying problem,  Chancellor Merkel is being slowly edged towards the "Eurobonds " solution, and saying that Greece will come out from this mess, whilst her coalition partner, Philipp Rösler, the vice chancellor and FDP leader, said it should no longer be a "taboo" to talk about a Greek insolvency.

 The conservative newpaper Die Welt said yesterday "It's a question of attitude, and whether to reassert such noble principles as avoiding debt, taking responsibility for mistakes, and protecting public funds -- principles which every state institution and every responsible politician must honor." And with the CDU having poor showing at the recent elections,Chancellor Merkel is now between a rock and a hard place.

So with German opinion turning firmly against  Germany bailing out Europe, the saga continues, and the markets look on. Even yesterdays action from the main Central Banks will in my view, only delay the inevitable.

On a brighter note, Oak Leasing has been chosen by a large Restaurant Franchise Operation as its leasing partner for all new projects.  The key is there are always opportunities for entrepreneur's to move forward in any type of business, in any economic cycle. That is where Oak Leasing, with its expertise can, and will help new start entrepreneur's, and give them the financial help to start them on the road to success. Whatever happens in Europe, it is critical to support our new start business's in the UK, for without them, we will all struggle. 

The elephant in the room

Talk is cheap they say, but the talk that the EU leaders are currently engaging in, is very expensive. There is a huge elephant in the room , and they are ignoring it ! They could have sorted out the whole crisis months ago with decisive action, but they simple dithered.  Germany & France really hold the major purse strings, Germany domestically cannot proceed with what is needed, which is a "euro bond". With an election due next year in Germany, the "eurobond" will be the decisive factor, and Chancellor Merkel knows this only too well.

So the real decisive factor is not down to the EU, but Germany's domestic election.The next question is, will the Euro wait for the decision from Germany. My own view is that the pressure on the Euro will simply mount until something has to be done.

Whilst this is going on, the UK, is not flying, but still has its head above water, and as yesterdays figures about German growth show, we are not doing as bad in the real world as some people thought.

The next few weeks will prove quite exciting for the Euro-zone, but if the UK continues on its slow but steady growth, we will be OK.  There is a great deal of talk concerning Bank Lending being restricted,  remember, Oak has the capacity to help in all of your acquisitions, we can even arrange sale and lease back if you wish.

Something Oak has not got, that is an elephant!

Is Fudge Europe's most popular sweet?

I am sure that Fudge has to be the EU's favourite sweet, they have been fudging ever since the first financial alarms sounded concerning Greece. Up to last Thursday, it was simply too little too late.And even after Thursday announcements, I think they are simply postponing the inevitable.

On top of the Fudge, we have the US taking brinkmanship to a new level. Now on the face of this, you might wonder, will this effect us in any way? If we take the US problem first, most banks use US bonds as gold plated collateral security in the interbank lending. If the US loses its AAA rating, so do the US bonds. This in turn will make banks very reluctant to lend to each other, and this puts the brake on any bank lending to SME's et al.

In the EU, it is purely a only matter of time before Greece finally cries enough is enough and disengages from the Euro. I do not think that any amount of patching up can sort out their deficit The effect on this to the Euro is unknown, but I would suggest that it will weaken. 

However, there is an upside. Although the UK is not flying by any means, we are stable and growing, I know by only 0.2%, but in the teeth of the recent cuts, this cannot be sniffed at all. They always say that the best time to invest is when you are coming out of a recession.

May I simply say that we have the money to help whatever business you have to invest in the equipment that you need, and that you will know that once a lease is signed, it cannot be  recinded during the period of the lease, whilst an overdraft can be withdrawn in just a few weeks leaving you high and dry.If you need a new credit line, just give us a call. here.

Compared to fudge, this is glacier mint. Now where did I put the sweet tin !

Rarer than Hens Teeth !

The banks are still not lending to SME's. According to the Bank of England today, "small businesses are still being rejected, ignored and treated unfairly by banks", MPs were told yesterday.

Sir Mervyn King said yesterday that  "Lending to businesses by banks is still falling"

The big question is when will the lending climate improve. I personally think that although the climate is harsh, it could get worse in the next year as the Greek question on default begins to affect not only Greece, but the banks who have lent money into Greece. To give you an idea to the size of the problem, according to the BBC, bank & private lending from French Banks into Greece is just over $40 billion, Germany next with $11 billion, and the UK at just over $10 billion.

 
If these loans turn into problems, this amount of money will simply disapear from the debt market and will have to be refinanced through other ways, most probably via the relevant governments.

At the moment, although the conditions are very tough, we at Oak have the ability to lease or refinace projects from £1000  up to £5 million plus, both in the UK as well as Europe, and crucially have expanded our lines well into the next few years.

So if you are looking for hens teeth, you know where to come!

Standing still is not an option.

Back in the mid seventies, when I first started in Leasing,  the company I was with launched a sliding  card lease calculator, which worked out the lease rentals for every £100 increase in costs. This was considered the most cutting edge sales aid tool available. At this time, remember that a simple calculator was costing in the region of £8- £ 10, and back in the 70's that was quite a lot of money.

How things have changed, last week, Oak Leasing launched  the first equipment leasing app in the UK. The amount of information and the rate calculator available would be something that dreams were made of back in the seventies.   From simple calculators, we moved on to PC's, whose capacity and speed have changed evrybodies lives. Now it seems that PC's are beginning to look dated, with new cloud technology starting to take over.

I have said many times, standing still is never an option, and technology is helping everybody access information quicker, and at a time that suits them best.  That was one reason why we launched the Oak leasing App, you can work the rentals out, propose the customer, whilst sitting with the customer. Leasing has now access to another closing tool, and in this present climate where only last week  Vince Cable was bemoaning the bankers lack of providing enough credit, many people forget that lease finance is a simple but effective tool in overcoming budget restrictions as well as cost objections.

Now where was my sliding rate calculator.

Its nice to know you are right!!

This was published yesterday on an international leasing website. They must have read what I said last month !!

"New global prudential regulations are likely to bring a material increase in the cost of all credit provided by large banks. This, in turn, is certain to affect the global leasing market, because of the prevalence of bank-owned or bank-funded operations across the market".

To keep in the know, just read the oaklease blog, and be a step ahead of the rest.

They say every cloud has a silver lining, although in this present financial climate, you have to dig pretty deep.

The crisis over the Eurozone, is deepening, even if all the politicians seem to be denial. The Finnish Government can halt  the Portugal debt bail out; the Greeks are still on the slippery slope, and just when you think the Irish are working their way out of the problem, the French say the will only agree to a rate cut to the Irish, if the Irish change their ultra low tax rate on business.  "C'est La Vie!" Nothing new in Europe then.

In the UK, we are still slowly emerging from our recession, according to the latest information on bank lending, net lending to UK firms has actually been falling significantly in recent months, according to the British Banking Association, which recently produced figures showing that it fell by £4.6 million in February and by £4.7 million in March.But you need to replace some equipment to expand and grow  your business. So what is the way forward for you?

We all know, you cannot stand still, to do nothing is simply sliding backwards. Every time, the banks have acted like this, leasing has grown, as the demand for extra credit has turned from expensive bank overdrafts to equipment leasing. The slight silver lining lies here, as inflation rises, a lease rental is fixed, so inflation will erode the real cost to the company. This coupled with the fact that leasing companies are hungry for your business means that there should be some great deals out ther for you.

In all this financial news, at least I found a sliver of silver.!

Please keep your comments coming. They are much appreciated.

What Lies Ahead for Leasing?

After a break, I thought that I should start up again with my thoughts on where we are now, and what lies ahead.

Leasing at the moment is moving ahead quite well, not as well as pre 2007, but certainly far better than 2009. So that is the good news. The art of running a business is to try and anticipate what the future might come up with, and to prepare for what lies ahead.

No one is sure what lies ahead, but there are indicators of what might happen. With the reforms proposed by the Independent Commission on Banking , it will could cause difficulty in the banks raising the wholesale debt that they will require by the end of 2012. This amount is somewhere between £400 billion & £500 billion.There is a concern that there is not depth in the market to buy all of this debt.

The concequence is that debt will become a scarcer commodity, and as we all know, the price of a scarce commodity always rises. Simply supply & demand.

So why should this be a concern to me I hear you ask. I think that credit could become more limited during the latter part of this year & next year. The cost of credit, I also think will rise accordingly.

Now we come to the nub of the matter, if you are thinking of investing in any plant & machinery of any sort, now is the time to do so for many reasons.

Firstly, with a lease, the rentals are fixed throughout the period of the lease, so no matter what the market might do in the next few years, you have ring-fenced your equipment leasing costs.

Secondly,  there is credit available right now, and is priced reasonably according to risk. So to sum up the old TV game show, "The Price is Right" and  you have fixed repayments throughout an uncertain few years.

From the suppliers point of view, you have a window of opportunity, You and I know that windows always start to close at some point.

I have tried to put the events of the real world into a normal perspective. I would appreciate any comments from anybody. I just hope that this is of help.