The Royal Bank of Scotland is selling its aircraft leasing business to Sumitomo Mitsui Financial Group, Japan’s second largest bank, for about $7.3 billion.
Sumitomo, which beat off rival bids from Well Fargo and China Development Bank, will acquire RBS Aviation Capital’s fleet of 206 aircraft and commitments to buy a further 87 by 2015. This is RBS’s largest sell-off since it received the world’s biggest government-funded bank bailout of $70.5 billion in 2008.
“The acquisition of RBS’s aircraft leasing unit, the fourth largest in the world in terms of book value, will enable [Sumitomo] to further expand and develop the business in Asia and other emerging markets,” Sumitomo said.
RBS expects to close on the deal in the third quarter after getting antitrust and regulatory approvals.
The bank, majority owned by the government since 2008, put the Dublin, Ireland-based leasing unit up for sale in 2009, but pulled the auction when the airline industry plunged into recession.
The aircraft leasing business is dominated by General Electric, which had 1,502 aircraft at the end of 2011, and International Lease Finance Corp, which leased 1,068 planes. RBS Aviation ranks seventh. RBS remains active in ship finance and is the biggest lender to Greek ship-owners with a portfolio worth over $12 billion.
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