One of the world’s biggest banks has teamed up with a UK contract hire and leasing company to deliver a new funding and fleet management service for fleet operators.
The new agreement between Santander Corporate Banking and Zenith Provecta continues a trend where banks have been shifting away from non-core operations, such as contract hire and vehicle management.
“The fleet market is currently undergoing significant upheaval due to some of the larger leasing companies rationalising their operations and capital constraint issues for smaller independent companies,” said Mike Oxby, director of asset finance at Santander Corporate Banking. “Therefore I believe the timing of our new dual-branded proposition could not be better.”
The proposition sees Santander’s corporate customers offered fleet funding through the bank with Zenith Provecta providing fleet management.
It is not a white-label service so it will be clear to fleet and finance managers throughout the contract that it is their bank - Santander - funding their fleet and Zenith managing it.
Rather than offer this type of partnership service in the past, banks have traditionally bought fleet management companies or established their own.
“We did look at establishing our own ,” said Oxby. “But we’re experts at managing risk, we’re not experts at providing fleet management services. But we need to offer a whole spectrum of services and we believe this is the best solution.”
Santander Corporate Banking has been established for less than a year here and has little exposure to car funding, although it has considerable experience with commercial vehicle funding through its acquisition of Alliance and Leicester in 2008.
This new deal allows it to expand into the market without the need to establish its own contract hire arm or takeover a current provider.
“It’s a logical and sensible way to approach the market,” says Andrew Cope, Zenith Provecta chief executive officer.
“This is going back to a very open and obvious relationship – it is a disclosed way of dealing with lenders."
This approach wouldn’t work for every bank, says Cope, but several mainstream UK banks no longer operate contract hire businesses.
“Not all banks will divest themselves of their non-core operations but some have,” he says. “They still provide funding but not a contract hire operation.”
The dual-branded fleet proposition allows Santander to provide a key service to its corporate customers, who will be offered a full range of funding solutions including contract hire, contract purchase, sale and leaseback and self-funded contract hire in addition to maintenance, accident, risk, legacy, daily rental and grey fleet management solutions.
Zenith will continue to use a choice of other banks to provide funding to its customers.