Leaseurope has undertaken a large-scale research project highlighting the low risk nature of leasing in Europe. We show that leasing loss and default rates are lower than banking averages, particularly during crisis periods, due to the role of asset ownership as in-built security. This project includes multiple reports, each of which provides a valuable source of information for regulators, leasing practitioners, parent companies, investors, academics and anyone else wishing to better understand the industry.
We partnered with Deloitte in 2012 to collect detailed individual contract data for over 2 million leases across 25 European countries from a group of large pan-European leasing companies covering all different types of business models. This data covers the financial crisis years from 2007 – 2011 and thus helps to understand how leasing portfolios react during an economic downturn.
These reports are available free of charge to Leaseurope's national member associations and leasing companies that form part of their network. If you would like to obtain copies, please h.mcewen [at] leaseurope.org (contact us).
An academic analysis published by the University of Cologne in 2017 (with an update in 2019), quantifies for the first time what a risk appropriate prudential regulatory regime for leasing could look like. It provides a comprehensive summary of the current treatment of leasing under the Capital Requirements Regulation (CRR), models real unexpected losses compared to regulatory capital requirements and suggests how to adapt the CRR to reflect the real risks of leasing.
Our main report, also published by Deloitte in 2013, broadens in scope to include all client types (SMEs, corporates, public sector & financial institutions) and focus in more detail on loss rates. It is shown that asset ownership has an important role to play in keeping leasing losses lower than those of traditional lending. The advantages that the asset brings when it comes to recovering losses on a contract in default are also highlighted.
Published by Deloitte in 2013, this report specifically covers the riskiness of leasing to SMEs, where low loss rates emphasise the importance that the client places on the asset. Capital requirements are compared to an internal estimate of the necessary economic capital, which show that the regulation significantly overestimates the riskiness of leasing to SMEs.