Since Vince Belcastro was tapped to head Santander's Corporate Equipment Finance division in 2015, the business has grown by $1 billion in assets. Financial results were strong in 2016, with 176% year over year growth. As part of Banco Santander -- one of the largest banks in the world -- Santander Corporate Equipment Finance provides a strong foundation of capital support for middle–market and large corporate clients that require the mission–critical, revenue–generating equipment essential to day–to–day business.
Belcastro brings more than 25 years of experience in secured financing and leveraged finance to his role, primarily in the risk management-related areas of the corporate middle-market arena. A senior secured credit professional and expert structuring specialist, he has held management positions at a number of leading financial services firms, including CIT Group Inc., Citibank and Republic National Bank.
With two years under his belt at Santander, Equipment Finance Advisor caught up with Belcastro to ask about his secret to success and his outlook for the division going forward.
Equipment Finance Advisor: Santander Corporate Equipment Finance has grown by over $1 billion in assets since 2015. How has your team achieved such tremendous growth in this competitive leasing/lending environment, while also operating under stringent bank regulatory lending guidelines?
Vincent Belcastro: Our growth can be attributed to the dedication of the Equipment Finance team’s industry professionals and to Santander’s commitment to this business. A key component to any successful growth strategy is to have a team in place that knows how to structure transactions that provide flexible financing solutions to our clients while providing downside protection to the bank. At Santander, we have worked hard to earn the trust of our partners and we are able to adjudicate credit transactions quickly and execute on deals from beginning to end. In addition, given the financial strength of Santander, we are able to take down large hold positions where the opportunities require us to do so. This has been beneficial on the direct side and the syndication desk.
Equipment Finance Advisor: When you took over in March 2015, your mission was to build a leading-edge equipment finance business led and operated by a strong team – including highly experienced business origination, operations, credit and asset management personnel. Please tell us a bit about your team and how it has achieved such success in a relatively short period of time.
Belcastro: We have a team of professionals with deep and broad industry experience and we work together to meet the needs of our clients. On average, our team members in new business origination, underwriting, equipment management and documentation have more than 20 years of experience in the business. We work hard to build strong relationships with our customers and with our team. It is important to have the right team in place in order for the business to be successful. I have put a lot of time and effort into recruiting the right people. I try to lead by example and believe that an engaged workforce will produce positive results for the company.
Equipment Finance Advisor: Please tell us about the type of business your team is pursuing – in terms of primary asset classes, typical customer credit profile, average deals size, geographic scope of coverage, and the mix of true lease versus loan structures.
Belcastro: Our business is a fairly broad and includes several asset classes. Generally, our largest industries are transportation, construction, general manufacturing equipment, technology and rail. As a result, we have built a diversified book with good yields that is more heavily weighted towards loans and capital leases, with a 65 percent to 35 percent true lease mix. Our credit box and pricing structure generally lets us transact in the BB+ to single B markets. On average, we tend to be around $20 million in single obligor limits. If you look at our $1.1 billion portfolio, it has a solid BB profile. While our business development officers are mainly on the East Coast, we are a national business and work with our clients across the country to facilitate their equipment financing needs.
Equipment Finance Advisor: Describe the mix of new business volume generated over the past two years – in terms of directly originated business versus buy-desk activity. Do you see this mix changing in the coming years and if so, why?
Belcastro: In regard to our business mix, we have been pretty evenly weighted for a group that has been in production for two years. Currently, new direct client transactions are 55 percent of our volume, with our buy desk accounting for 45 percent of the source volume. I would expect that, as we hire new business development officers and, if our syndication partners hold more volume and syndicate less, we will continue to increase our direct and bank partnered opportunities. Our team works across business lines to ensure that we can meet all of our clients’ banking needs. It is critical that we all work together to ensure that we are helping our customers achieve their financial goals and grow their companies.
Equipment Finance Advisor: From your perspective, how will the rising interest rate environment impact demand for equipment investment during in the next 12-18 months?
Belcastro: I cannot speculate on how rising rates will affect equipment investment demand, but I can tell you that we will continue to offer customized financing solutions for companies that want to purchase or lease new equipment to help meet their manufacturing or expansion goals. We are committed to this business and want to help companies invest in the latest technologies so they are manufacturing and delivering goods at the highest possible standards needed to compete on a global scale.
Equipment Finance Advisor: Is there anything you’d like to add we didn’t cover that would shed insight into your vision for Santander Equipment Finance and Leasing?
Belcastro: My goal at Santander is to make the Equipment Finance and Leasing group a best-in-bank business that will continue to be a strong driver of growth, coupled with steady and strong results. We have an opportunity to grow organically with strong direct client acquisition and continue to be a strong player in syndications. Over time we will begin to focus on carving out industry specialization niches in areas such as technology, healthcare, and some form of managed solutions. It is an exciting time as the industry grapples with alternative usage models and new technology that is becoming more and more self-sufficient in many ways through the use of artificial intelligence. I clearly want us to be at the forefront of understanding how to provide flexible financing solutions for these asset classes.