Commercial Finance Specialists

The Royal Bank of Scotland has finalised the sale of its aircraft leasing business, RBS Aviation Capital, to the Sumitomo Mitsui Financial Group, one of Japan’s biggest banks, for $7.3 billion.

Other interested parties had included US bank Wells Fargo and the China Development Bank. But RBS finally concluded the deal with their Japanese buyers after two years of trying to offload the commercial aircraft leasing business.

RBS bought the aircraft finance business, International Aviation Management Group, back in 2001. The bank moved it into its non-core division, however, in 2008, following the state bailout.

While the operation had been profitable, and the sale is expected to have raised a sizeable profit over its market value, the large funding costs made it a complicated liability in the attempt to reduce the bank’s investment arm.

The non-core division has now been reduced by over 60% from 2009, to under £100 billion.

RBS have said that the proceeds from the sale of the aviation business would go towards strengthening its capital holdings to meet regulations specified in the Basle III agreement.