How the banks compete for leasing business
Citicorp Industrial Credit, which has $2 billion in assets, seeks to offer a full range of services to both the large-ticket and the middle market. (A middle-market deal involves less than $5 million.) John Dewey, president, elucidated this full range as meaning: "Originating, structuring, investing and distributing.'
Citicorp acts both as investor and as distributor. This is unusual. Entities in the leasing marketplace are, as a rule, either investors (lessors) or distributors (brokers), or one or the other depending on the transaction, but not both in the same transaction, which is often Citicorp's objective. Citicorp Industrial Credit effectively underwrites, and then may be the investor in its own deal, or lay-off part or all of it, depending (among other factors) on its tax-sheltering appetite. Another related technique is the sale of fully tax-depreciated assets on lease, or shares in such assets.
"In the middle market what really matters is the marketing network, while at the big-ticket end it's important, above all, to be fully familiar with the type of asset you're dealing with,' said Dewey. Citicorp now has 70,000 middle market customers, up from 4,000 in 1980, and is adding to them at the rate of 2,000 a month.