ING is pulling out of UK leasing industry, which thousands of small companies rely on to fund growth and investment. This could remove as much as 40pc of the funds available to the smaller end of the market.
The Dutch bank is shutting Surrey-based ING Lease UK, blaming a “poor economic environment” and tougher rules forcing banks to hold more capital in reserve, reports The Telegraph.
Its closure represents a £1bn a year loss to a market which many small businesses have come to rely upon as traditional bank funding has become harder to secure.
While the industry provides £22bn a year to companies, ING is one of a handful or providers that specialise in the so-called “broker market”, which will leave the smallest companies hardest hit by the decision.
Competitors including Investec and Aldermore have said they will attempt to fill the gap, but it is thought that they will struggle to provide more than half of the shortfall in the short term.
Leasing agreements allow small companies to acquire equipment such as new vehicles and machinery without having to make a large upfront investment. A broker arranges the purchase and the company simply makes monthly repayments, while the asset remains owned by the leasing firm.
ING Lease will close to new business at the end of the month, and is then expected to take up to three years to run down its book.
Almost a third of new investment in equipment has been paid for through leasing contracts this year. ING’s withdrawal is expected to cause significant disruption and make it harder and more expensive for small firms to access these deals.
Julian Rose, head of asset finance at the Finance and Leasing Association, said ING was one of “seven or eight active players in the broker market” which smaller businesses typically use to secure leasing contracts. “We’d be expecting them to look at these customers. Over time a lot of the gap left by ING will be filled.”
ING said that in a “new environment with different capital rules, we have to apply our resources to core markets where we can get the best competitive advantage”.
The closure comes as ING said it is planning 2,350 job losses – including 300 at ING Lease UK – as it announced a sharp fall in net profits on the third quarter.
Net profit for the three months reached just €609m (£486m), down from €1.69bn for the same period last year.
ING has already agreed to sell its UK savings business, ING Direct, to Barclays, as it offloads assets to repay the Dutch government for a bail-out it received in 2008. The job cuts are designed to save the bank €500m.
