growing factoring company. The strong rebound in the German Factoring Market – after a first time decline by 7.5% in 2009 – results from growth in existing client portfolios, which reflects that the economic crisis has been overcome in a broad part of the mid-corporate market. At the same time the number of clients increased by 53% compared to the first half of 2009. For the whole year a turnover volume of €120bn seems to be achievable. Export factoring rose by 28% and
import factoring by 29%. Eurofactor AG is the second biggest import factor in the world and experienced an import turnover growth of 89%.
Local and national economic situation The economic environment continues to be favourable for factoring companies, as growth expectations of German industry are still very positive (according to the latest forecast it will be 3.5%). It is expected that the basis of economic growth will broaden from export- driven to domestic growth, enforced by rising consumer demand.
Despite the generally positive outlook of German industries further growth might be hindered by price increases or shortfall of supply in energy or basic material resources. Moreover weaknesses in some neighbouring countries of the EU zone as well as further stagnation in the USA or growth dampening measures in important import countries like China can limit the further development.
Opportunities
One of the rare winners of the crisis seems to be factoring. Enterprises have learned from the crisis that they need more flexible funding structures and factoring has proven to be a reliable financial partner for midcaps. The access to new bank loans is still difficult for SMEs. As banks retain their restrictive credit policies, they are unable to serve the increasing liquidity needs of the German industry. In contrast, credit insurers are providing more credit limits, giving factors more room to engage in new financial deals.
Challenges The importance of risk management remains high, as in phases of strong economic growth after a downturn the risk of insolvency
84 November/December 2010
increases as well and is reflected in the growing number of company bankruptcies. There have been recently two insolvencies of factoring companies in the German market. We therefore keep a focus on tight risk management and other monitoring measures, such as debtor risk coverage by credit insurance, tight watch of client solvency and the development of their sales markets, consequent adaptations in risk exposure, etc.
Thoughts on prospects for 2011 This year, we have been able to constantly gain new clients, whilst retaining our existing client-base. The traditional midcap demand is still lacking but should come back, if economic recovery continues. We notice a temporary strong increase in demand by multinational corporations.
Klaus Taube CEO
GE Capital Bank AG Since its integration into GE more than five years ago, GE Capital Bank AG has grown in sales, number of employees and offices. In 2009, GE Capital Bank AG reported one of its best years ever in terms of new business volume despite the crises; and this positive trend will continue in 2010. However, total volume for 2009 decreased slightly to €21bn. Jörg Diewald, chief commercial officer of GE Capital Germany, is confident that the bank will be able to further grow and exceed volumes of 2009 by far in the coming years. Due to the global crisis in 2008 and 2009 the volume of the German factoring industry in 2009 decreased for the first time since many years. But in Germany we do see strong signs of a quick recovery and factoring volumes are coming back accordingly – still not sure how sustainable this will be, but positive signs are obvious since the beginning of this year. Given the economic swing and increased regulation on the European financing industry, which puts pressure on most of the financing institutes, GE Capital Bank AG expects a further double- digit growth for 2010. More than €28bn factored volume for
2010 is expected with sustainable quality of earnings and profits. In 2011 GE Capital estimates a further increase of factoring
Business Money Jörg Diewald
volume, driven by working capital financing needs of German companies and ongoing pressure on traditional banks (e.g. Basel III). GE Capital Bank AG is part of GE Capital Germany, a German-wide financing solution provider, which includes in addition to factoring, fleet management, equipment financing and commercial distribution finance. With such a range of products, GE Capital is now well positioned in Germany to reach a leading position in the SME financing market – that in addition to its international financing capabilities through the GE Capital network. Since GE completed the full acquisition of GE Capital Bank AG in 2005, the Mainz- based bank has expanded its workforce in-line with the tremendous growth, benefiting many regions in Germany. The number of employees has risen from 130 to over 200 and the volume has more than tripled since then. GE Capital opened new offices in Hanover and Stuttgart, extended its network through northern and southern Germany adding to those already in Düsseldorf, Munich, Hamburg and Leipzig. The extended reach of GE’s business in Germany and the further acceptance of factoring as a modern and dynamic financing tool are driving our expectation to further growth for the next years.
Jörg Diewald Chief Commercial Officer Ireland
Bibby Financial Services Ireland Since setting up its head office in Dublin back in May 2006, Bibby Financial Services has expanded rapidly in a turbulent trading environment. The demise of the Irish economy and banking industry has been well documented amongst the key casualties of the global economic downturn. Almost
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