The Nordics’ leasing market

Scandinavia’s leasing opportunities keeps attracting funders

Scandinavian countries keep posting year-on-year growth in leasing business, and lessors are showing renewed interest in the market.

Scandinavian countries have long been held as having some of the most resilient and productive economies in the European Economic Area (EEA), and the region’s leasing market is no exception: local leasing associations have been consistently reporting double-digit year-on-year increases in new business, a rate of growth one would expect from emerging leasing markets rather than well-developed ones.

The region also retains a strong appetite for green investment and innovative circular economy solutions – and though governments like Norway’s have signalled they will be less generous in environmental incentives going forward, Western Europe’s lessors still see potential in the market.

In September of last year, BNP Paribas’s Arval opened up a subsidiary in Norway. The country is famously electric vehicle-friendly: fully-electric vehicles commanded over 20% of market share and over half of all vehicles were either electric or hybrid as of the end of 2017, according to trade body Norsk Elbilforening. Arval’s Oslo office is set to take a leading role in expansion across the other Nordic countries, where the fleet lessor already had a presence.

Within BNP Paribas, equipment finance unit Leasing Solutions took the same cue, also targeting Norway as a Scandinavian launchpad. In February of this year, it agreed the acquisition of Landkreditt Finans, a ten-year-old agriculture-focused lender on the country’s west coast.

The French lessor subsequently unveiled ambitious aims for its new unit, starting with renaming it after the main Leasing Solutions brand. The unit will act as the spearhead of Leasing Solutions’ expansion, acting as a centralised back-office to reach every Nordic country by 2020. The lessor even brought onboard 24-year BNP Paribas veteran Fabrice Perrett to head the Scandinavian offensive.

Lessors’ commitment to the region is likely to spur the interest of wholesale funders in turn, especially those driven by a green policy mission. SG Finans, Societe Generale’s leasing unit in Norway, recently received some €180m from the EU’s European Investment Bank (EIB) to support green investment in the country. The first transaction supported by the funding was the financing of 17 Volvo fully-electric buses for transport operator Norgesbuss.

Business in Europe’s biggest and more established leasing markets seems set to at the very least slow down in the near future – and while countries further east are still reporting double-digit growth rates, equipment’s green credentials are not always the top priority. The environmentally-minded and still-growing Scandinavian markets may just provide lessors with the best of two worlds.