Stephen Johnson, Commercial First
How long have you been with Commercial First for?
We first came up with the business plan in 2002 but it wasn’t until 2003 that the business was fully launched.
2. Where did you come from before that?
I qualified as a chartered accountant and spent my early career within corporate finance at BDO Stoy Hayward. Whilst there I advised clients who were looking to sell and buy businesses and I helped others raise equity to expand.
3. Have you always seen yourself working in specialist finance?
I have always been surrounded by finance; it is the family business so I suppose it was natural to work in the sector.
4. If you didn't work in specialist finance what would you be doing instead do you think?
If I had been good enough I would have loved to be a professional golfer, but much more likely I think I would have stayed in corporate finance/venture capital.
5. What general trends have you noticed emerge within the commercial mortgage industry over the past 12 months?
The market is dominated by the clearers – non UK banks, building societies and specialist lenders have in the past delivered real choice for customers and competition. This is really missing from the market now, and although the banks are looking to expand their lending, the market needs some alternatives. We have seen the emergence of private money, attracted by the low LTV’s and high margins that can be commanded, but so far this has been very much niche lending.
6. What trends do you think will emerge over the next 12 months?
I think we are going to see more of the same, i.e. a lack of real volume competition to the clearing banks. The private money sources are likely to increase, but we need to see an operating securitisation market to increase both supply of funding and competition. I think we will see commercial advisors expand their products and activities to compensate for the difficulties still being faced in funding clients.
7. When will you fully re-enter the lending market?
We continue to work flat out to achieve a return. We are exploring a complete range of funding options from wholesale finance, deposit finance, private funds and institutional term loans. We retain the full lending, sales and risk expertise and are ready to go once a funding solution is available.
8. How did the company weather the blows of the recession?
We have a large commercial loan book and have worked hard at managing these existing clients. The team have done an excellent job in some of the most challenging market conditions, only this week many of our securitisations were actually upgraded by the rating agencies. In addition we have built a new business – the Commercial First Partnership.
The concept is simple: we’re looking to establish a volume distributor of business finance products by bringing together a national group of commercial professionals, whilst investing our resources in helping to build each partner’s business. Many of our partners need support and are attracted to being part of a national group that has strength and leverage with lenders/providers. This has helped us diversify our business model, keep in touch with the market, learn about new product opportunities and of course generate income for our business and our partners. This is a really exciting business model, and it is ironic that through adversity sometimes new opportunities emerge that would have otherwise been missed.
9. Commercial First claims to "challenge the traditional approach to commercial lending" can you give me a concrete example of how you do this?
We adopted a mortgage approach to commercial lending, defining clearly the product and lending criteria and we focused all our efforts on supporting intermediaries. This combination proved very successful with the group lending over £2.2bn in the five years since we first came up with the business plan.
10. What advice would you give to anyone trying to enter the market today?
The market has changed dramatically, and the brokers/advisors that will be successful are those that adapt. I feel strongly that brokers need to develop their own client database, and invest time and effort in building relationships and referrals. This direct to client model maximizes conversion rates and income as well as providing an opportunity to sell a range of different products. An over reliance on property transaction finance has meant that as the property market crashed many advisors have not had other products to fall back on.
0 Comment/s
Add your comment:
Share this page