Motor Trader The award-winning and longest running UK magazine for car retailing professionals. Your first stop for News, Jobs and Reports for the motor industry.
Volkswagen Group UK is considering plans to apply for a UK banking licence in order to provide car finance loans after the UK leaves the EU.
Volkswagen Financial Services (VWFS) operates under its German parent’s licence. However, after Brexit the ability for UK based businesses to operate under the current EU bank cross-border passporting system is uncertain.
VWFS told Motor Trader it is currently reviewing a number of options with regards to diversifying its sources of funding. One option under consideration is the establishment of a UK regulated bank which would enable it to take retail deposits. VWFS pointed out this is common practice amongst other captive lenders in the UK citing both Ford and Renault.
“As part of this process, discussions are underway with the Prudential Regulation Authority (PRA), which may subsequently lead to VWFS making a formal application for a UK banking licence,” said a spokesperson.
The move is part of a contingency planning exercise to protect VWFS against post-Brexit regulatory risk.
“As the largest provider of car finance in the UK, our funding costs are managed prudently through the continued review of sources of funding,” said David Maloney, CEO of VWFS.
“As with many companies with European wide business interests, such reviews must also take into account the potential impact of the UK’s decision to leave the European Union.
“Discussions with the UK regulators, in particular the PRA, may result in VWFS making an application for UK banking licence. Should we pursue this path and establish a UK regulated retail bank, it would diversify our funding sources whilst helping to alleviate post-Brexit uncertainty and ensure we continue to provide lending products that generate satisfied and loyal customers and support balanced growth.”
VWFS operates across over 700 UK dealer sites. The business provides point of sale finance for dealers representing VW, VW Commercial Vehicles, Audi, Skoda, Seat, Porsche, Bentley, Lambourghini and MAN Trucks.