Leaseurope’s View Leaseurope’s View
Jacqueline MillsJacqueline MillsAdviser, LeaseuropeAdviser, Leaseurope
Brussels, 5 November 2007Brussels, 5 November 2007
World Markets in 2006World Markets in 2006
US
ELFA
175.2 bio€
Europe
Leaseurope
297.5 bio€
of which:
Equipment Leasing
250.7 bio€
Japan
JLA
53.5 bio€
Australia
AELA
17.2 bio€
New leasing volumes; source: Leaseurope 2006 Annual Survey and local leasing associations
Brazil
ABEL
7.2 bio€
Canada
CFLA
18.5 bio€
New Leasing Volumes in EuropeNew Leasing Volumes in Europe
UK UK 55.0 bio€ 55.0 bio€
Germany Germany 50.4bio€ 50.4bio€
Italy Italy 48.1 bio€ 48.1 bio€
France France 36.1 bio€ 36.1 bio€
CEE CEE 33.4 bio€ 33.4 bio€
Benelux, CH, AT Benelux, CH, AT 28.8 bio€ 28.8 bio€
Med Med 27.5 bio€ 27.5 bio€
Nordic Nordic 18.1 bio€ 18.1 bio€
New Leasing Volumes per Cluster in 2006
European Leasing PenetrationEuropean Leasing Penetration
11.89% 12.50% 13.02%
14.83% 15.08%
17.25%
19.02%
4%
9%
14%
19%
24%
29%
2000 2001 2002 2003 2004 2005 2006
Total PR
Average Leasing Penetration
Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006
11.89% 12.50% 13.02%
14.83% 15.08%
17.25%
19.02%
16.06%17.67% 17.35%
20.23%21.64%
24.30%
28.43%
4%
9%
14%
19%
24%
29%
2000 2001 2002 2003 2004 2005 2006
Total PR Equip
European Leasing PenetrationEuropean Leasing Penetration
Average Leasing Penetration
Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006
11.89% 12.50% 13.02%
14.83% 15.08%
17.25%
19.02%
16.06%
17.67% 17.35%
20.23%21.64%
24.30%
28.43%
4.75% 4.87%5.62% 5.51% 4.97%
6.32% 6.14%
4%
9%
14%
19%
24%
29%
2000 2001 2002 2003 2004 2005 2006
Total PR Equip RE
European Leasing PenetrationEuropean Leasing Penetration
Average Leasing Penetration
Source: Leaseurope data & investment figures from Eurostat; Incl. hp from 2003 & new LT members in 2006
Leaseurope’s Preliminary ViewsLeaseurope’s Preliminary Views
Existing standard does have flaws…Existing standard does have flaws…
Does not recognise A&L as they are defined under Does not recognise A&L as they are defined under concept frameworkconcept framework
Allows for structuring possibilitiesAllows for structuring possibilities
Some users make adjustmentsSome users make adjustments
& flaws from the industry’s point of view & flaws from the industry’s point of view
… … but it also has meritsbut it also has merits
Internationally acceptedInternationally accepted
Recognises the difference between various kinds of Recognises the difference between various kinds of leasesleases
Once classification is performed, rules are clearOnce classification is performed, rules are clear
IAS 17
Leaseurope’s Preliminary ViewsLeaseurope’s Preliminary Views
Changes should lead to a practicable Changes should lead to a practicable and proportionate standardand proportionate standard
ProportionateProportionateThe businesses we represent deal in large part The businesses we represent deal in large part
with vanilla small and medium ticket leasingwith vanilla small and medium ticket leasing
PracticablePracticableLessees in EU just coming to terms with IAS17Lessees in EU just coming to terms with IAS17Burden on lessees should not be too great, it’s not Burden on lessees should not be too great, it’s not
just a question of booking a right of use, just a question of booking a right of use, subsequent measurement is important toosubsequent measurement is important too
Types of Asset on LeaseTypes of Asset on Lease
Source: Leaseurope 2006 Annual Survey. Includes data for Leaseurope’s new automotive long term rental members (when available)
New Leasing Volume Share per Asset Category (2006)
Total: 297.5 bil€Total: 297.5 bil€
AutomotiveAutomotive
EquipmentEquipment
Ships, Planes, Ships, Planes, RailRail
Real EstateReal Estate50%
29%
5%
16%
Contract MaturityContract Maturity
50% 50%
9.97%
73.05%
12.45%
4.52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0 - 2 years 2 - 5 years 5 - 10 years 10 years & above
For all assets excluding real estate. Source: Leaseurope 2006 Annual Survey. Includes data for Leaseurope’s new automotive long term rental members (when available)
New Leases Granted in 2006 According to Original Contract Term
Typical Contract SizesTypical Contract Sizes
For all assets excluding real estate. Source: Leaseurope Member Associations
Average Contract Size in € (2006)
29,846
56,525
23,723
0
10,000
20,000
30,000
40,000
50,000
60,000
DE IT FR
Eu
ros
• In the UK, 84% of business asset finance is small to medium ticket
• In Italy, 70% of machinery and industrial equipment contracts are made for a value of less than €50k
Additional Facts
A Flavour of Our ConcernsA Flavour of Our Concerns
Simple lease example compared to Simple lease example compared to real lifereal life leases leases
Decision to leave Decision to leave scopescope until the end may lead to until the end may lead to difficultiesdifficulties
StructuringStructuring opportunities or their necessity may even be opportunities or their necessity may even be enhancedenhanced
Accounts under a RoU approach must be Accounts under a RoU approach must be understandableunderstandable and and comparablecomparable
Lessor’s Lessor’s ownershipownership of the asset must somehow be of the asset must somehow be reflectedreflected
Lessee accountingLessee accounting according to the nature of the leased according to the nature of the leased may pose practical difficultiesmay pose practical difficulties
Lessor accountingLessor accounting is obviously crucial for the industry is obviously crucial for the industry
Going ForwardGoing Forward
Standard setters should not get tied into a one Standard setters should not get tied into a one size fits all approach but consider: size fits all approach but consider: materiality materiality a modular approacha modular approachincreased use of the notesincreased use of the notesthe impact on low transaction value/high volume part of the impact on low transaction value/high volume part of
the industrythe industry““full service” leasesfull service” leases
IASB/FASBIASB/FASB should make the most of the Leases WG should make the most of the Leases WG and feel free to turn to industry for informationand feel free to turn to industry for information
LeaseuropeLeaseurope intends to maintain contacts with the intends to maintain contacts with the IASB, int’l leasing organisations and the European IASB, int’l leasing organisations and the European industryindustry
Contact LeaseuropeContact Leaseurope
www.leaseurope.orgwww.leaseurope.org
[email protected]@leaseurope.org