Committed to Brokers
This article appeared in the May issue of Leasing World magazine.
It’s been five years since United Trust Bank decided to develop their Asset Finance business beyond concentrating largely on the agricultural sector. Since then, with Martin Nixon recruited to head up the new division, they’ve built an experienced team of asset finance professionals and a very successful business funding everything from coaches to classic cars and CNC machinery. What’s more, 100% of its business comes from brokers.
The Asset Finance Division has turned in 25-30% growth in lending every year since then and has every intention of doing the same in 2016. Asset Finance is an important part of the UTB success story which has seen the Bank double its staff numbers and launch new products in Professional Lending, Technology Finance and Specialist Mortgages, all in the last three years. In March, United Trust Bank reported record financial results for 2015 and a 67% increase in pre-tax profits and in April was placed 25th in the Sunday Times BDO Profit Track 100 of fastest growing private companies. With that back story, we couldn’t turn down the opportunity to go and meet Martin and the team at their new offices in Moorgate.
Martin Nixon has spent the best part of 35 years in the asset finance industry having worked for only three funders in that time. His career started with The Associates (American-owned at various times by Gulf & Western, Ford and then CitiCapital) in the early 1980’s. Martin worked his way up to be Operations Director having helped build a book of around £200m by growth and acquisition by the time he left in 1999.
Commitment to brokers
United Trust Bank’s asset finance business is totally broker focused with no direct sales element at all. It was during his time with The Associates that Martin first started to develop their broker business and as he explains, in the early 1990’s it was a very new concept to his American bosses.
“There were very few funders doing broker business back then and I was working for an American business where the broker model was totally alien to them because brokers in the US just didn’t exist. It took a while to convince them that this was a model that we should be using.” Martin explained.
“It was very clear to me from early on that the broker business we were doing was both more profitable and clean. At the time we had our own direct sales team and then a few very experienced brokers dealing directly with the office. This caused some friction at the time but I was sure that, if properly managed, the broker side could flourish and become an important part of the overall business. Many of the brokers I started dealing with nearly twenty five years ago are still dealing with me today and ironically they include several of the old Associates direct sales team who switched to broking very successfully. They don’t always agree with my underwriting (!) but they know I’m committed to maintaining a strong, long term relationship with them.
Martin continues: “When I joined IBJ Leasing (part of Mizuho Bank) at the start of 2000, the bank became almost exclusively broker introduced and at UTB, since joining in 2011, the Asset Finance division is now 100% focused on the broker market as its sole delivery channel. We do not transact any direct or vendor introduced business as a matter of policy.”
Martin’s commitment to developing broker relationships appears to be paying off. UTB’s asset finance business volumes were up 80% year on year for the first quarter of 2016 and their asset finance book has grown tenfold since Martin joined. Much of the recent growth Martin puts down to a continued focus on excellent service from proposal stage to payout, an increased appetite for some larger transactions as the book grows and the now broader range of assets UTB will fund, with CNC machinery being a particular area of lending where UTB has seen increasing activity. The team now numbers 16 people including Sales Manager Keith Sangwin, Credit Manager Peter Price, three Business Development Managers, supported by a very experienced internal credit and administration team.
Spreading the word
Keith Sangwin joined United Trust Bank from Aldermore at the start of 2015. Appointed as Head of Sales for Asset Finance his focus has been on raising awareness of the Bank and developing a broader network of broker partners. He spends a lot of time out on the road meeting with new brokers as well as his long established contacts. He says it’s been something of an eye-opener how many of his long standing contacts knew relatively little about UTB.
“It was clear early on that brokers who had a really good relationship with the BDMs could name several reasons why they chose UTB for their deals.” He says. “Flexibility, quick credit decisions, same day pay-outs, direct access to Credit and a strong appetite for refinancing were the answers which came back most often. However, we found that lots of brokers didn’t have us on their funder panel because of misconceptions about some of the business we would do.”
Keith explains that being a ‘bank’ gave some brokers the impression that UTB would only be interested in business where the credits were spotless. “In reality our book is extremely diverse. We do a lot of straightforward funding on buses and coaches and HGVs etc. but we’ve also built up lots of expertise in other asset classes like performance and classic cars and we do a lot of refinancing too. If the deal is right we’re very competitive on rates and commissions and if cases don’t quite stack up we’ll look at the underwriting and see if we can find a solution which works for everyone.”
Over the last year, UTB invited selected brokers to consider them for proposals on suitable transactions that they would usually have offered to other lenders first.
“For stronger credits on appropriate deals we offered enhanced rates to compete with the terms offered by the funder who they would have usually placed the business with.” Keith continues. “Some customers are very price sensitive and by giving us the opportunity to look at the deal, in many cases we have been able to take a positive view on rates which has suited everyone. We’re widening that group of brokers throughout this year.”
One size does not fit all
Peter Price joined United Trust Bank in 2013 and works closely with Martin on the Credit side of the operation. Well known and respected within the industry, Peter’s career spans nearly 25 years working in sales, collections and credit roles, for both Bank of Scotland and ING.
“When I left ING there were several offers on the table, but the appeal of moving to UTB was firstly the challenge of building up a business from a low base and UTB’s commitment to developing the business with broker relationships at the core”.
From talking to Peter it’s clear he enjoys the more personal approach for which UTB has become known. His broker relationships, built up over several years, means they often call him to talk through a deal at a very early stage of a proposal.
“To me, when looking at a proposal it’s about reasons to do a deal rather than reasons not to do it and having the ability to discuss the proposal with the introducer is sometimes the key to getting a proposal agreed. I believe that brokers appreciate being given a quick indication on whether or not you’re going to be able to offer the funding. It means as much to them to get a quick ‘No’ as it does a quick ‘Yes’.”
“We do a lot of straightforward funding, but if a proposal comes in and it’s a bit out of the ordinary, we use our skills to try to find a way to do it. We might suggest structuring a transaction in a slightly different way but still give them the funding and the payment terms they need. It’s very satisfying to go back to the broker with a solution they perhaps hadn’t considered but which still suits the borrower, the broker and the Bank.”
Peter has also played an important role in expanding UTB’s range of assets having encouraged the Bank to move into sectors such as engineering, CNC machinery and, more recently, the media sector. For example, the Bank recently paid out their first deal to fund some highly specialised camera lenses for a film making company. Also, with the Bank’s Technology and Professional lending teams recently being integrated into the main Asset Finance fold, Peter and Keith are now also responsible for the further development of the two products.
It’s good to be different
Martin Nixon explains that where United Trust Bank is able to demonstrate greater flexibility it has given them a definite edge over some of its competitors:
“We’ve extended the range of assets we’ll fund and refinance and having key differentiators, like not having a restricted age policy, means that we have picked up some excellent business funding vehicles and plant that would have been dismissed by other lenders. We’ve also developed a strong reputation in the classic car sector, recently completing one of our biggest ever loans for the purchase of a rare Aston Martin.”
On the subject of larger loans, United Trust Bank has gradually increased its maximum deal size for Asset Finance and in the last three months has completed several £1m plus transactions.
Martin continues, “We’re generally a mid-ticket funder and we do a lot of relatively standard transactions, of between £10k and £100k, but increasingly we’re being asked to look at substantially larger transactions and we’re very capable of delivering on those as well.”
Martin feels that despite any uncertainty surrounding the outcome of the EU referendum there’s plenty to be positive about asset finance, not just for UTB, but for the wider industry.
He says. “There’s growing awareness of the benefits of asset finance in the SME sector both for financing purchases and releasing capital from existing assets. If funders play the long game, if they stay commercially minded on credits and pricing and if trade bodies such as the FLA and NACFB continue to play a leading role in promoting the product and the industry, I think asset finance funders and brokers have a very bright future.”