Market Strategy Flashcards
What is the reason for bank owned providers dominance
Liquidity (greater access to capital than smaller organisations)
Wide range of distribution channels
Does an independent provider have to have a banking licence?
No, not to operate and does not have to be regulated only specific transactions.
Makes it is easier for smaller asset finance companies to set up, often lease firms set up their own book and select certain deals rather than brokering them out.
What is the ownership models for independent?
100% owned by directors who established the business
Key staff members have minor shareholding
100% owned by financial institutions such as private equity fund
Subsidiary of a trading group
Subsidiary of a non-UK company
Multiple owners (private individuals/financial institutions)
What is the main objective for a captive provider?
Promote the sale of their parents products by offering ‘point of sale’ finance
What are the various captive business models?
Being a trade division of the parent entity
A separate subsidiary wholly owned by parent group
Having a white label programme with an asset finance provider who operates the scheme on the behalf of the vendor
Joint venture between vendor and asset finance provider
What are the 3 market strategy considerations?
-Credit policy - type of transaction, acceptable credit risk
Required returns on capital
The range of preferred asset types and transactions size
Key drivers for independent?
- Access to capital which determines scale of the operation
- Block discounting
Operational capacity and resources - ability to transact and payout
Most have generalist approach to asset policy some are higher risk higher return deals
Key drivers for captives?
- Determined by objective of the parent company
- Priority is to increase unit sales and profitability for the vendor
- Key measure is finance penetration = percentage of the product sales through finance
