The economy could lose some £1bn of finance as ING Lease UK is closed down. The leasing arm of the Dutch bank, ING, lends to thousands of small businesses that want to buy new vehicles and equipment. Leasing contracts have become more popular as bank loans and overdrafts have been harder to come by.
Under a lease arrangement, a broker arranges the purchase of the equipment, which is owned by the leasing company. All the business has to do is keep up the regular payments.
ING has already announced the sale of its UK savings business, ING Direct, to Barclays. It has been off-loading assets to repay the Dutch government for aid received during the financial crisis in 2008.
The withdrawal of leasing contracts by the European banks has come about as these banks are being asked to hold more capital in reserve.
ING leasing UK has its offices in Redhill and half of its 300 work force are expected to be make redundant in the near future. ING has been cutting back on many of its European operations that will result in the loss of 2350 jobs
Will there be a funding shortfall?
In 2012 31% of total investment in new machinery and equipment has been paid for through leasing contracts, so the ING closure will cause months of disruption. Other finance providers such as Investec Bank, Aldermore and Close Brothers will try and make up the difference but it is expected that there will be a substantial gap in funding especially for small businesses where ING did most of their lending.
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