Leasing

The Czech leasing industry is among the largest in Central Europe and ranks between 12th and 13th in the whole of Europe. Between 2000 and 2008, the volume of assets financed through leasing exceeded CZK 100 billion annually, culminating in 2007 at CZK 130 billion. A slow-down in 2008 was followed by a dramatic fall of the market in 2009, to below CZK 50 billion. This was caused in part by the impact of the economic crisis on the leasing industry and a consequent decrease of investment activity, lower consumer demand, and financing issues on the side of the leasing companies. The other reason for the drop was a structural shift away from lease financing toward consumer loans. This trend in the Czech Republic follows similar patterns in Western Europe. The concentrated leasing market is broadening the spectrum of its services to include operating lease with more sophisticated full service fleet/equipment management and leasing products with other additional services.

The bedrock of leasing is car finance, but the overall share of this form of asset finance has been gradually declining. Truck and equipment finance continues to grow, as leasing is and likely will remain the preferred way of financing these assets. Real estate leasing is not very developed, compared to the overall size and development of the Czech real estate market. The Czech leasing market is highly concentrated with the 15 largest companies controlling the majority of the market and further industry consolidation continues.

Current industry issues

• IASB and FASB propose significant changes to lease accounting
• Impact of the economic crisis on both leasing companies and their customers
• Growing competition in consumer credits area of non-leasing and non-banking as well as banking institutions
• Complex tax regulations (e.g. leasing tax depreciation or VAT issues)
• Financing fixed interest rate leasing products (interest rate risk management)
• New consumer credit law (impacting also lease contracts)

Industry-specific services

• Advice on accounting transformation from the Czech accounting standards to International Financial Reporting Standards (IFRS)
• Review and development of tax-efficient products
• Accounting and tax advice regarding derivatives focused on exchange rate and interest rate risk management (including hedge accounting)
• Lease portfolio restructuring, credit risk management of problematic clients or of the whole leasing company (cash management, cash release, etc.)
• Analysis of the impacts of the consumer credit law on the leasing companies and its products
• Strategic cost management
• Sales channels analysis and efficiency improvements
• Sale and leaseback
• Salary survey PayWell for the sector of financial services