Belarusian market is expected to grow

November 19 2010, source: "Belorusskie Novosti"

Experts name banks and foreign investors as the main development stimulators in the near future. The period of crisis is over, and leasing market is steadily recovering. According to the estimates of Belarusian Lessors Union, the portfolio of national leasing companies in the end of 2009 amounted to 4trln 143.325 bln roubles, that is 13% more than in 2008. The volume of portfolio is expected to grow by15-20% by the end of the year.

However, according to the forecasts of Anton Andreenko, Director of Avangard Leasing, Belarusian leasing services market is supposed to double in the upcoming couple of years. It is supposed to happendue to more active crediting from commercial banks and attraction of foreign investments.
Today the banks only partially participate in the development of leasing services, because they do not consider leasing operators reliable and stable partners. According to Andreenko, banks agree tocollaborate only in certain cases, for example, when the bank has surplus assets to be invested or whenworking with a specific client. These factors make Belarusian leasing operators dependant on banks.

According to him, precautions taken by Belarusian banks when collaborating with leasing companies are quite understandable. “When a leasing operator has a portfolio of 1—20, if not 2-3 transactions, what bank will trust its finance to such a company?" – asks the expert. - Finally the banks base their decision on the borrowing capacity of the final user, not the leasing operator, which is traditional abroad.

According to Aleksey Goriunov, Director of Mobilniy Leasing, one should also take into consideration the passive behaviour of banks and leasing operators in attracting their customers. “State leasing companies have a fixed customers base from the state sector. That is why these companies do not search for new clients. Banks on their side also can not generate the flows of new clients”.

However market players see a positive perspective in the development of collaboration with banks. There turn of borrowed funds and the minimization of risks remains one of the key issues for the banks. The majority of the banks try not to work with enterprises in case there is even a slightest doubt in the re-payment of credit resources.

This is useful for leasing, because leasing schemes are usually considered a safer variant. " To purchase the equipment or goods for leasing one requires only 20-30% of its total price and the risks are considerably lower, which means a leasing subject becomes liquid at the secondary market.

We believe that this understanding will allow Belarusian banks to increase the volume of financing of leasing companies several times," – supposes Andrenko.

According to Goriunov, leasing operators should also stimulate market development and increase indemand for leasing services.

“One of the possibilities to broaden financial abilities is the issue of bonds. They enable to create a new model of financing and make it more available for the client. In this case leasing transactions can be entered into even in case the company has certain losses or has just recently been registered”
According to the estimates of Mobilniy Leasing, the main leasing subjects in the market are cars and trucks, technological equipment and service station equipment. The main scope of demand for leasing products in concentrated in the segment between 10 to 50 thousand dollars (more than 80%).

Market players consider current conditions more than acceptable for conclusion of leasing transactions not only with small and medium, but also with major business. For example, the entrepreneurs in western countries use leasing for purchasing of fixed assets, and the level of its use in the West amounts to 25%. However, in Belarus the share of such forms of investment is low and does not exceed 6.5%. Experts believe that with the use of small business potential leasing market will also gain growth possibilities.