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  • 1. By Aditya Gupta Roll No. 857 Semester V (U.G)
  • 2. INTRODUCTION  A lease is a contract whereby the owner of an asset (the lessor) grants to another party (the lessee) the exclusive right to use the asset in return for the payment of rent.  Leasing’s share of real GDP of Russia in 2011 was 2.40% (2010: 1.62%); the share of new leasing business in capital investment (production assets) was 12% (2010: 7.7%); and the share of the leasing of machinery, equipment and transport vehicles in the total volume of investments in such assets made up 30.1% (2010: 17.0%).
  • 3. REGULATORY MECHANISM FOR LEASING IN RUSSIA  Financial Leasing Law, 2002  Civil Code of Russia  UNIDROIT Convention on International Financial Leasing
  • 4. STATUTORY PROVISIONS  Property that Can be the Subject of a Lease Any non-consumable tangible property, other than land plots and other natural objects, may be the subject of a lease under Russian law. (Arts. 4(1) &19 of the Financial Leasing Law.)  Parties to a lease Financial lease transactions involve three parties under Russian law. A financial lease transaction involves a lessor who undertakes to purchase non-consumable property identified by the lessee from a seller and to deliver temporary possession of that property to the lessee for the lessee's commercial use.
  • 5.  Required provisions of a Lease Agreement in Russia. 1. It must be in writing 2. A financial lease agreement must unambiguously identify the subject property and the seller. 3. A lease agreement also should indicate the amounts of the lease payments, the payment due dates, and any other conditions and obligations to which the lessor or lessee agree.
  • 6. STRUCTURE OF THE LEASING INDUSTRY Railway Rolling Stock – 49.4% Motor Vehicle for transportation- 9.5% Light Passenger Cars – 7% Aircraft – 6.4% Building equipment & Machinery – 10.5 Building-2.8
  • 7. STRUCTURE OF LEASING INDUSTRY  Structure of the leasing industry was prepared on structural market analysis with a breakdown by type of leasing, asset (equipment, transport vehicles, immovable property) and calculated the share of each such asset segment in the total volume of new leasing contracts concluded in 2011.  Transport vehicles have always been the most popular leasing assets, and the present-day Russian leasing industry is no exception. The combined weight of railroad rolling stock and locomotives, aircraft, and vehicles. segments of the domestic leasing market reaches 75%.  In Russian leasing, have there been cases of segment occupying more than 49%,
  • 8. FUNDING OF LEASES IN RUSSIA 52.6 8.42.7 6.3 7.1 22.9 Russian Bank Cred. Forgn Bank Credit Loan from founder Bonds own funds Other
  • 9. ANALYSIS OF THE FUNDING  With each year the number of Russian leasing companies that can obtain financing directly from foreign banks grows.  There is a growth in the volume of credit operations with the involvement of the national agencies for insurance of export-import operations, e.g. from Germany, Austria,, the USA and other countries.  In general, such institutions provide credits for a term of three to five years, and in some cases 7 years.
  • 10. Contd…….  Analysis showed that in 2012 more than 50% of new business was initiated by leasing companies affiliated with the State. This means that the State has been supportive of leasing companies in the crisis.
  • 11. ACTIVITIES OF LESSOR IN RUSSIA In practice many Russian leasing companies have managed not only to copy but also successfully to adapt the experience of the countries with developed leasing industries.  In 2012 Russia had 44 leasing companies whose new business volumes were each in excess of US$100 million, including 7 of which were over the US$1 billion level, two of which recorded more than US$7b billion.
  • 12. LEADING LEASING COMPANIES IN RUSSIA  Among the leasing companies who used this form of financing in their leasing operations 1. VTB-Leasing 2. Europlan 3. Caterpillar Finance 4. MAN Financial Services 5. Carcade 6. Siemens Finance (Vladivostok) 7. Folkswagen Group Finanz 8. VR Leasing 9. Deutsche Leasing Vostok
  • 13. AVERAGE DURATION OF LEASE IN RUSSIA 0 10 20 30 40 50 60 70 80 90 2007 2008 2009 2010 2011 Year Avg. Lease Terms ( in moths)
  • 14. CAPTIAL LEVERAGE IN RUSSIA  The average debt-to equity ratios (Capital Leverage) per Russian Leasing company in 1. 2007 – 12.4 : 1, 2. 2008 - 7,9 : 1 3. 2009 – 7.8 : 1 4. 2010 – 8.5 : 1 5. 2011 – 10.7 : 1.
  • 15. DEVELOPMENT OF LEASING PORTFOLIO 0 5 10 15 20 25 30 35 40 2008 2009 2010 2011 2012 Year Euro ( In Billions)
  • 16. 16 Trends in Leasing Industry in Russia  Customers:  Smarter  Diverse  Seek more Alternatives  Service Conscience  Understand Asset Management  Trending to Technology  Products:  Assume/Manage more Risk  Solution Packages  Leases with Other Financing Packages  Venture Leasing  Leasing Companies:  Specialization  Diversification  Consolidation  Globalization  Branding, Relationship, Im age Building  Rules and Regulations  Distinction Between Lease and Loans  Expanded Public Official Understanding  Global Harmonization of Accounting
  • 17. PROSPECTS AND OPPORTUNITIES IN RUSSIA  LEASING REMAINS AN INTERSTING FINANCIAL INSTRUMENT 1. Full deductibility of lease payments for tax purposes 2. Accelerated triple (x3) depreciation 3. Long-term financing 4. Ownership of the leased asset
  • 18. THE FUTURE OF LEASING INDUSTRY IS PROSPEROUS IN RUSSIA  Focus on modernization of Russian industry  Development of infrastructural projects  Need for residential construction  Development of Russian regions  Real-estate leasing – still underdeveloped
  • 19. THANK YOU ! QUESTIONS, PLEASE ?