Speculation about the future of Lombard Vehicle Management (LVM) had been rife ever since owner Royal Bank of Scotland (RBS) sounded the death knell for its contract hire company in 2009.
In the wake of the financial crisis, which saw the world’s biggest bank brought to its knees and effectively saved by billions of pounds of taxpayers’ cash, RBS declared LVM as a non-core asset.
Its plan was to de-risk and re-focus RBS, and as a result it would listen to offers for the contract hire company.
During the past three years potential suitors have been mooted and included GE Capital. But, with GE Capital understood to be close to acquiring the business, it was reported that RBS pulled the plug on talks after failing to agree on the price and structure of a deal.
Last week ALD Automotive – owned by French bank Societe Generale and one of the UK’s largest leasing companies – signed into a five-year contract with Lombard.
The deal with RBS’s dedicated asset finance division is to provide contract hire and fleet management to its customers through a white label product. LVM will be wound down.
“What we want to concentrate on is what we do best,” explained Lombard’s managing director Alex Baldock. “Lombard wants to be a world-class ‘cap ex’ funder.”
The move follows a trend for banks to increase lending to fleets without creating their own leasing arm: Barclays, Santander and Clydesdale Bank have taken similar approaches within the past two years. It also leaves the FN50 with just three wholly bank-owned leasing operations: ALD, Arval (BNP Paribas) and Lex Autolease (Lloyds TSB).
While an exact launch date is still to be confirmed, it’s anticipated that the new scheme provided by ALD will go live in June or July. The Lombard name is likely to be kept. It’s also expected that, while the initial deal is for five years, this will be extended further.
Keith Allen, managing director of ALD Automotive, said: “The new proposition will have access to all the vehicle leasing business generated through RBS banking and Lombard relationships, reinforcing the success of the multi-sales channel strategy we have adopted to grow our business and driving the business further forward to become a top three player within the UK leasing industry.”
Having become one of the UK’s leading white-label providers, with agreements with a number of manufacturers, this latest agreement further reinforces the success of ALD’s multi-sales channel strategy.
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