RBS banks £4.7bn in sale of aviation leasing business

 

The Royal Bank of Scotland last night made its largest disposal
since being bailed out by the taxpayer, selling its aircraft
leasing arm to Japan's second-largest bank for £4.7bn.

Sumitomo Mitsui Financial Group beat off competition from China Development Bank and American lender Wells Fargo to land Dublin-based RBS Aviation, which owns 206 aircraft and has another 87 on order.

The timing of the sale could not be better for RBS, which is 83 per cent owned by the British taxpayer. The Edinburgh-based bank is heading for a showdown with the Government over plans to pay big bonuses to key executives. They include the group's chief executive, Stephen Hester, who can take some credit for this disposal.

Since his appointment in 2008, Mr Hester has been attempting to shrink RBS's balance sheet by dismantling the empire built by his predecessor, Sir Fred Goodwin. But the scale of the challenge and the market turmoil sparked by the eurozone crisis means that the Government is still a long way from recouping the £45bn spent on the rescue.

RBS Aviation, established in 2001, grew to become the world's fourth-largest aircraft leasing company behind General Electric and insurer AIG. RBS originally put the business up for sale in 2009 but the auction was put on hold after the economic crisis sent the aviation industry into a tailspin.

Lessors make money by buying aeroplanes and leasing them to airlines for a monthly fee, profiting when the aircraft is sold after 10 to 15 years.

"The fact that this substantial transaction, the largest ever sale of an aircraft leasing company ever undertaken, has been executed so successfully in such a challenging market is a great testament to the quality of the business that we have built up under the RBS Group's ownership," said Peter Barrett, division's chief executive.

So far, some £160bn of assets have been sold or wound down on Mr Hester's watch. Last week, RBS announced plans to scale back its investment banking activities after the Government voiced concern that risky lending and state ownership should not be mixed.

At a cost of 3,500 jobs, RBS said it would sell or close its cash equities, deal advisory and corporate broking arms, including the stockbroker Hoare Govett, which was inherited with the disastrous deal to buy the Dutch lender ABN Amro. However, it will remain active in fixed-income, debt capital raising and foreign exchange. Also in the pipeline are plans to sell or demerge its insurance division, which includes the motor insurer Direct Line.

"Reaching agreement on a deal of this scale in such a volatile market is a significant success for our non-core division and a credit to SMBC," said the RBS finance director, Bruce Van Saun. "This transaction further evidences our progress in reducing our non-core portfolio and returning the group to a position of strength."

Funds from the transaction will be used to strengthen RBS's balance sheet.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Guru Careers: Investment Writer / Stock Picker

Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue