In the year to 31 July 2017 Close Brothers Asset Finance (CBAF) recorded a loan book of just over £2 billion. It was the year that Neil Davies moved from his existing position as head of the company’s leasing and rentals division and was appointed chief executive of CBAF.
Davies told Asset Finance International: “In fairness I took over a very successful business that consisted of a wide variety of thriving niche asset lending teams. What I did bring immediately was a different leadership style, made some small changes to the management team and appointed some new heads of business – nearly all from within the business.”
He also significantly extended the scope of co-operation between the asset sectors within CBAF which served to increase business effectiveness within the division. “It also,” he said, “added somewhat to the staff’s job satisfaction levels.”
CBAF’s activity in asset sectors is amongst the most varied and extensive in the industry ranging as it does from agriculture, aviation, construction, engineering and marine through to print, renewable energy and transport & vehicle leasing.
Davies learnt his trade at the coalface, initially as a broker and then, upon joining CBAF in 2007, heading up Close Brothers Leasing – the bank’s first determined attempt to make an impact in the middle ticket leasing sector. “It worked,” he said, “and now that business has a loan book of around £700 million.”
Davies stressed that CBAF ploughs its own furrow in the asset finance industry. “We don’t look to see what other companies do,” he said. “We set our own pricing and our own lending criteria. We genuinely aim to add value for our customers in as innovative way as possible. One typical example is in our Sale-and-HP-
Back product which is a prime way of releasing capital for small businesses.”
CBAF currently employs around 150 direct sales staff: “80% of our business is direct to customer but our core leasing and smaller ticket finance business is largely intermediary driven,” he explained. Some 440 staff report directly to Davies out of a total complement of 500 which includes back office specialists.
New auto finance products
Davies sees one of his chief tasks as being to make CBAF scalable. An example of this recently is its wholesale funding product whereby, after only six years in the sector, the company now has active new business connections with 70% of the Fleet News FN50 ranking of top UK fleet lessors. Over the past 12 months the team has worked closely with CBAF’s existing customer base to create a bespoke personal contract hire product. He explained: “Personal contract hire (PCH) is especially valuable at the present time since it allows traditionally non-regulated vehicle providers to implement a fully compliant scheme while maintaining control of their customers.”
PCH is considered very much a product of success for the near future since Davies believes: it helps create deeper relationships with end-user corporates by supporting their general employees; develops additional and potentially significant income streams; grows total fleet numbers and future end-of-term income from vehicles coming back off hire; and future-proofs the business with a move away from traditional company cars.
The perceived success of this PCH product amongst CBAF’s industry peers is reflected in the Best Product Motor Finance accolade it won at the recent International Asset Finance Network conference in London where it achieved a highly commended award. (CBAF also won two other such awards at the event - for Best Customer Service and Back Office Innovation)
CBAF has satellite companies in Ireland and Germany and it was in co-operation with the German arm that a significant transaction was completed this July. CBAF’s print team led the acquisition by Circle Media Group (CMG) of major European book printing group CPI.
With CPI’s revenues of €360 million, 2,500 employees and 16 factories spread out over five countries (France, the UK, Germany, Spain and Czech Republic) the deal is set to ensure that CMG strengthens its European printing business and establishes a major presence in the UK.
Circle Media Group, meanwhile, has 2,700 employees and revenues of €550 million. With the acquisition of CPI, Circle Media Group will have combined pro-forma annual sales of €900 million and more than 5,000 employees, making it the largest independent European group in the delivery of print and media capabilities.
CBAF Germany specialises in offering flexible and tailored funding solutions for Mittelstand businesses in the engineering, manufacturing and print sectors. There is, Davies confirms, huge potential for CBAF in Germany especially in terms of demand for its Sale-and-HP-Back product which is not readily available in that country.
Innovative technology – in its own way
Davies believes that innovative technology and digital transformation, as increasingly practiced in the automotive finance sector, is unlikely to be adopted in the same way by equipment lessors.
However, he has recently introduced new Salesforce CRM technology with the aim “of developing customer portals, improving customer relationship management and helping CBAF’s sales staff to maximise their potential”.
“In addition,” he stressed, “with the drive towards increased scalability and the need to react rapidly to regulatory changes, we have planned to technologically re-platform our whole business. The first elements of the system will be rolled out through our whole business by July 2019.”
Setting the standard for staff mentoring
Apart from CBAF’s well-known and long-standing record for prudent lending and good practice it has in recent times stood head and shoulders above its industry peers in mentoring and encouraging its new staff members.
Close Brothers Asset Finance Sales Academy was established some three years ago to source and train the next generation of sales professionals in the asset finance market.
Davies explained: “Applicants can include those already employed in asset finance who haven’t yet considered a career in sales, or delegates from outside the industry. After their training the new recruits will play a key role in supporting CBAF customers, providing specialist expertise and support for their finance requirements.
“As a result of our first sales academy we now have 15 highly talented additional sales people in our business who have already contributed some 2,000 new business deals.
“Following the success of the inaugural programme CBAF is running a second academy and, mindful of the gender gap that traditionally exists in the equipment finance industry, sought 50% of recruits to be female.”
Closer links with manufacturing industry
Another highly lauded CBAF initiative is the SME Apprentice Scheme which is supported by the AMRC (Advanced Manufacturing Research Centre) Training Centre and the Manufacturing Technologies Association. This is part of Close Brothers commitment to supporting small and medium-sized businesses which might otherwise not be able to afford to take on an apprentice.
Davies explained that under the scheme “Close Brothers helps to pay for 20 apprentices to learn their skills at the AMRC Training Centre at Rotherham to assist smaller businesses in the region secure the skills they need for future growth.”
“We contribute 50% of the wages of the apprentices in the first and 25% in the second year, and cover all training costs. This is the fourth years of the SME Apprentice programme underlining our continued support for SMEs in taking on apprenticeships.”
“In addition,” he said, “it affords links with industry which assist us in keeping close to them and their concerns – and generally keeps is up to date with what’s happening in the marketplace.”
Davies looks ahead optimistically to the immediate future of CBAF trading. “Essentially,” he said, “I would like us to continue doing what we currently do – with expansion into new geographies in mainland Europe and some further new niches in the UK.
“We are prepared to face the raft of impending new regulation and compliance measure that are on the horizon. We are also aware that these will affect the current unregulated sections of the industry – for example the intermediaries – and we will be there to do all we can to help them when the time comes.”
Davies’ optimism stretches to the vexed question of Brexit. “Despite the continuing uncertainty about the outcome of Brexit,” he said, “many of the UK’s SMEs have expressed concern about the impact this could have on the supply chain and have consequently started planning for the various possible outcomes.
“This is particularly true of the larger end of the SME scale, with the results of a survey we carried out of 900 businesses showing that the larger the turnover the more likely it is that plans are already in place – or are being formulated.”
He added: “This forward thinking is typical of the enterprise shown by the UK’s SMEs.”
Under Neil Davies’ leadership CBAF goes from strength to strength. Few equipment lessors can match its dedication to its business partners or the mentoring care it shows its staff - where an exceptionally low staff churn speaks volumes and, amazingly for a 21st century asset lender, a family feeling still endures.