Mike Cobb talks with Tristan Watkins, UK country manager for BNP Paribas Leasing Solutions, about his new role and the business’s focus following the decision to remain active in the UK
BNP Paribas Leasing Solutions has undergone a great deal of change in the past few years; a strategic review of the sectors and markets it would cover was initiated in 2011 and it cut back its business to a few core sectors and greatly reduced the French lender’s footprint in Europe.
One market which avoided the worst of the changes that cut through Leasing Solutions was the UK, which had been a strong profit centre for the business.
As a part of the lessor’s renewed commitment to the UK, the decision was made to offer long-term BNP Paribas employee Tristan Watkins the opportunity to take over the running of the UK business in September 2013.
Watkins, whose background in the bank has seen him work in mergers and acquisitions, internal consulting and retail banking among other areas, has been working in leasing and asset finance for over ten years, first for the car leasing arm of BNP Paribas, Arval, and then in Paris for BNP Paribas Leasing Solutions.
Leasing Life met him in his office at Leasing Solutions’ UK headquarters in Basingstoke and the excitement he feels towards his new role is still evident as he describes what the job means to him.
"My favourite position, and this might sound a bit of a cop out, is this one, because it’s the most stimulating, and it’s new.
"There’s lots of stuff to do and lots of stuff to put in place and to organise."
His enthusiasm hardly wanes throughout the meeting, despite at times having to touch on the tough times the business has faced in the past and anticipates in the future.
It’s no surprise, therefore, that he speaks very positively about the UK arm of the leasing company.
"2013 has been a pretty good year for us actually, probably better than we expected," he says. "In the UK we do around £1bn (1.2bn) worth of new business volume," referring to the past 12 months. "In fact we have beaten our budget targets for this year which is pretty good, so we’re quite pleased about 2013.
"Our view around the markets this year is that they have been pretty flat and we are up around 10% compared to last year."
"And that growth is pretty much across all markets segments, which is good for us," he adds.
It hasn’t all been plain sailing for BNP Paribas Leasing Solutions, however. 2013 was also the year in which the UK division saw the implementation of a new IT platform.
"We moved to the new platform in April 2013 and I think we’ve had quite a tough six months in terms of bedding in the IT system, but any migration is difficult," Watkins says. "I think the summer months were quite hard in terms of service."
The biggest dent came to the agriculture side of the business, which traditionally sees its biggest volumes during the summer months, the very time the platform migrated, Watkins says.
And the blow to this side of the business came just a few months after it had been selected by the parent bank BNP Paribas as one of the sectors the Leasing Solutions business would continue to cover.
In 2011, a decision was made to drop some of the markets covered across Europe and focus on just two main areas, Technology Solutions, which covers office equipment, IT and telecoms, and the yellow goods sector including commercial vehicles, materials handling, construction equipment and the agricultural equipment business.
In addition, the company exited some geographical markets. "We had to select the markets we wanted to be in, and the countries we wanted to be in," says Watkins.
"And because of that we exited countries like Switzerland and Hungary, and certain other markets."
"The countries we’ve chosen to be in, which is mostly Western Europe, and a few outside, such as the US, India, and China, are the countries where we are going to stay," continues Watkins.
The change in business model to a more limited offering is a move others have made too, with Société Générale Equipment Finance (SGEF) and Nordea completing theirs in 2013.
"Because we did ours in 2011 before anybody else, we are feeling quite strong, I think, across the whole of the group," Watkins says, while acknowledging that, at the time, the changes were hard for the group and for business relationships.
"It was quite tough," he says, "and exiting markets does imply writing to people and saying ‘thanks a lot John Smith, we worked with you, but no longer from the 1st of March’ kind of thing. That’s quite painful to say to a customer; that we don’t want you as a customer any more."
"To be fair, it was a lot more difficult in continental Europe, so when I was in Paris it was a lot tougher for us than for the people in the UK.
"In the UK we were quite astute at preserving our markets and our customers, particularly because it’s so profitable in the UK.
Traditionally it has been a profitable leasing market. But now we’re out of [the process]we’re thinking to ourselves: full speed ahead," Watkins says.
"Now we are up and running so it’ll help us get more into manufacturers and key accounts which has, I think, been one weakness of Leasing Solutions in the UK."
Watkins has clear plans for growth as he takes the helm at the UK business. One is to work on areas where the business has so far had only a limited success.
His main area of concern, he says, is the contract hire business. In France the sector is a successful one for Leasing Solutions, and the idea has been to replicate the model in the UK. Expanding that business from what was a near standing start has proved tough, says Watkins, the main reason being the already established business rivals in the market, but Watkins says the company is "looking to attack big name customers".
In 2013 the success of the first wave of this ‘attack’ was less extensive than Leasing Solutions had expected, Watkins adds, with only small inroads into the competition’s lead. However, Watkins has "high hopes" for 2014.
In other areas, the UK remains quite different from France and many other European countries, acknowledges Watkins.
One area is in the competitors the business faces. For example there is no single main competitor with each market segment presenting different rivals, Watkins says.
"Across Europe our biggest competitor is DLL (De Lage Landen)" regardless of sector, says Watkins, "in the UK, that’s not the case as each one is a bit different."
In Technology Solutions the market has only a few direct competitors. "There’s quite a few multinational companies that are more active in the UK than they are elsewhere. For example, GE or Siemens. They are big companies and they are very active in the UK, but in France, for instance, they are not that active," says Watkins.
On the yellow metal side of the business Watkins lists Aldermore, Hitachi, SGEF and Investec among Leasing Solutions’ competitors.
The lack of a single major competitor in the UK has been helped by the change of focus to just two main sectors since 2011, but also by the nature of the UK market itself, says Watkins.
The main difference in conducting business Watkins sees, between the UK and other countries covered by Leasing Solutions, is the strength of the broker market and its influence on the way companies have to operate in the country.
For Watkins, the broker market is a welcome addition to the way business is done in the UK, acting as both a source of new business and a barometer of its customer service levels.
"Brokers, in terms of service, are the most immediately demanding population.
"They want to have quick decisions, high acceptance, obviously, and they want the money quickly," says Watkins.
"The base of our job is, I think, about the delivery that we give to brokers" he continues, "and we want to work with them. And we will."
Brokers expect a different level of service to the vendor partners and the time frames are much longer too, Watkins adds.
"When I talk to Case New Holland or Canon or Toshiba they are also looking for homogeneous reporting every month, every quarter, or they want to have a meeting with directors of the board. They want a whole range of services that are very different," says Watkins.
"With brokers what they say is ‘today is Tuesday, fantastic, here’s £10,000,’ but tomorrow? Tomorrow it’s ‘you didn’t respond quickly enough so I’m giving you nothing.’ It’s a fantastic indicator of service levels," he adds.
Otherwise, the UK follows a very similar business model to its continental counterparts.
About two-thirds of ongoing business is in the Leasing Solutions name, even if that definition is, as Watkins admits, "slightly complex". White label vendor partners remain around one-third of the UK business and the lessor is set to add a big new name to its roster in 2014.
A deal announced in January with CNH Industrial to offer finance on Iveco trucks will add to the revenues of the Leasing Solutions group substantially, including in the UK.
Watkins’s team worked in partnership with the Italian, French and German branches to structure the deal which starts in April.
This will help with the lender’s ongoing plans to expand in the coming year, and come in addition to two projects the UK operation is working on to grow its business in the coming year. Expansion that could even potentially lead to the business requiring many more staff than it has at present.
"We are 400 people overall in the UK, so of a reasonable size, but we’re looking to build up," says Watkins. There is potential, he adds, for doubling staff numbers if all the projects come off, but says it’s not an objective of the UK business to expand at that rate.
And avoiding becoming too large in terms of staff numbers would help the UK business remain one of the French lessor’s key
Watkins says that as a measure of a return on equity, his division is more profitable than BNP Paribas Leasing Solutions’ home
Regulation is also an area which marks the UK out as different to the continent, and is a matter of concern for Watkins and his team.
"The regulatory burden is tougher in the UK," he says. "I think the change to the FCA [Financial Conduct Authority] we are finding quite hard to manage, because it’s very complex.
"And obviously all of our introductory sources have also got to apply for interim licence," says Watkins. "It looks to me quite complex, and from what I’ve seen in France, and I know a bit about France, Netherlands, Italy and Germany, the regulatory burden seems to be less heavy in those countries to date.
"Doubtless they will catch up. It’s a general trend, of course, in finance, to build up a bit in regulation."
To help its intermediaries and partners cope with the change, Leasing Solutions in the UK has developed a news and advice service, which aims to guide them through the process and avoid the pitfalls.
Watkins believes, through working with the FLA, the worries and concerns of Leasing Solutions and its partners will be addressed. Nonetheless, "its going to be quite hard," he adds.
Watkins remains upbeat about the UK business, despite this time of change, and hopes to steer the company to grow significantly and to build up its presence in the UK.
The addition of the CNH partnership and two other projects in the pipeline are likely to help Watkins leave his stamp on the Leasing Solutions UK business.
No matter what happens, it’s unlikely the smile and enthusiasm that he shows for the job will fade any time soon.