ABN Amro exit the UK Asset Based Lending market

Author: Sam Lewis, Director, Debt Advisory

ABN Amro officially announced last week that it will formally exit the UK Asset Based Lending (ABL) market following an internal review.

So, what does that mean for businesses that have facilities in place with ABN Amro?

Well, there are a number of factors to consider, as with any change of magnitude that affects your business. Yes, there are multiple ABL lenders out there so one would think it would be easy to simply replace ABN Amro with another provider and effectively ‘lift and shift’ the facility.

Unfortunately, it’s not that simple. Depending on how long the facility has been in place there may be different attitudes in the market to risk which can affect, amongst others, advance rates, excluded debts, export debtors and concentration percentages which could ultimately reduce cash availability and impact on a business.

And that’s before we look at some of the more quirky deals ABN Amro were known for, such as providing inventory lending, revolving plant and machinery lines and the occasional cash flow strip (unsecured loan) which other lenders don’t offer.

There may not be an immediate effect that business owners see, however, over time the likelihood is there will be less contact as staff levels are reduced, either formally or because talented people choose to jump ship before being pushed. This will mean all those little ‘relationship’ extras won’t be there, so normal requests such as an additional 10% advance rate for a busy period, or a small stretching of the agreed debtor days to help liquidity, or even a request to naturally increase the facility limit as you grow, won’t be actioned.

The one thing that is clear is that ABN Amro won’t be the funding partner of choice for UK companies looking for pro-active, tailored support with Asset Based Lending facilities.

This is also symptomatic of how funders, both lending and equity providers alike, can dip in and out of markets over time. This could well be the right strategy to maximise their returns but it often forgets about the customer at the centre of it all. The customer who would prefer to spend time running and growing their business than on refinancing.

Here at Heligan Group, we have a track record of helping clients find, assess, negotiate and choose the best financing options for their individual scenario, as we all know every situation is different, so our expertise isn’t limited to debt financing.

It might be that the ABN Amro situation isn’t relevant, but it has sparked thought processes about the future strategy and direction of your business. If that’s the case we would be delighted to speak to you and discuss how we can help.