In the spotlight: Barclays Corporate eyes significant growth

Barclays is no stranger to the fleet sector. It’s a major funder to two-thirds of independently-owned contract hire and leasing companies, but until now it’s been happy to steer clear of the limelight.

That’s been taken by rival banks such as Lloyds, which dominates the FN50 – the UK’s top 50 leasing companies by size – with Lex Autolease, and Royal Bank of Scotland’s Lombard Vehicle Management.

Bank-owned groups account for 57% of the FN50, equating to 708,000 vehicles, reflecting the enormous funding requirements for operating at this level.

But the lack of a contract hire business in its armoury is not deterring Barclays from planning significant growth in the sector.

“Fleet is one of those areas I consider very important,” says Alex Brown, global head of asset finance at Barclays Corporate.

Wanting to talk

“We are involved with 60% of the independent fleet market and it’s an area which I believe we can develop even further.”

The message from the bank is clear, “we want to talk”.

“We’re looking at the client base we have and at prospective clients to see how we can solve their funding needs,” says Brown, who is also on the board of the Finance and Leasing Association (FLA).

Barclays’s asset finance product is aimed at fleets that outright purchase their vehicles and is provided via products such as lease purchase, finance and operating lease.

Companies with turnover above £5 million are the main focus for growth.

The bank will have been buoyed by the findings of a report into the logistics sector it commissioned with Grant Thornton.

Speaking to decision-makers from 100 firms, with an average turnover of £58 million, it found an industry in an optimistic mood.

The majority said they expected to see an increase in turnover and subsequent investment in their business, while 77% reported vehicles would be an area they would be investing in during the next 12 months.

Funding is a top concern

But as banks and funders fled from risk during the global recession, their ability to supply leasing companies with capital, or supply the money at a low rate of interest, has been severely restricted.

Nearly two-thirds of respondents to last year’s FN50 survey said funding and a faltering economy was their number one concern, while 83% put it in their top three issues.

Barclays says it wants to speak to customers and better understand their needs but, while it is offering ‘a suite of products’, it’s clear that asset finance is central to its offering to the fleet industry.

Rob Riddleston, head of transport and logistics at Barclays Corporate, said: “The asset finance division is a key part of the business, but we feel it can do a lot more.”

Barclays has recognised how ‘robust’ the second-hand vehicle market has become and how assets with wheels can provide a good return to the asset finance division.

“You feed into any transaction lessons learned, experience gained, hence our view on the robustness of the vehicle in the marketplace,” says Brown.

“It also explains our desire to increase our exposure. But this is not just about asset finance, this is about Barclays,” he continues.

“Barclays wants to sit in front of clients and say look at the alternatives we can provide; a multi-product solution, which we discuss in detail.”

However, the company rules out setting up its own contract hire operation. Instead, it has struck several high-profile deals, which include making a new funding stream available to Ogilvie Fleet.

Already a significant funder to Ogilvie Fleet through its asset finance arm, Barclays Corporate has now structured an additional and increased borrowing facility to be available
to Ogilvie for use across all of its operations, which include construction, house building, communications and commercial development, providing greater liquidity.