Sumitomo Mitsui to acquire RBS's aircraft-leasing business for $7.3 bn
17 January 2012
Japan's Sumitomo Mitsui Financial Group (SMFG) and Sumitomo Corp are acquiring the aircraft-leasing business of Royal Bank of Scotland (RBS) in a deal worth $7.3 billion, in one of the most fiercely contested auctions with a Chinese lender.
Mitsui and Sumitomo emerged victorious after being pitted against China Development Bank Corp (CDB) in the final stages of the auction. Although CDB had submitted a higher bid, the state-owned Chinese lender took too much time to get the final approval from its government.
Dublin-based RBS Aviation Capital is the fourth-biggest aircraft leasing company by book value. It was created through the 2001 acquisition of a small advisory firm International Aviation Management Group and built into a business comprising a fleet of around 250 aircrafts with a current $3.7-billion order book.
It competes with other aircraft leasing firms like GE's Gecas unit and International Lease Finance Corp, and leases to 65 airlines in 24 countries. Its clients include British Airways, EasyJet, Qantas and Ryanair.
The disposal of RBS's largest non-core assets is the biggest since it received the £45.5 billion ($70 billion) bailout from the UK government - the biggest bailout of any bank in the world - during the global financial crisis in 2008.
RBS, which is 83-per cent owned by the UK government, said the sale, expected to close in the third quarter, would reduce its non-core assets by $7 billion. It expects to record a profit of about $300 million on the sale over the book value of the business.