Royal Bank of Scotland has struck a deal with a Japanese bank to sell its aircraft leasing division for $7.3bn (£4.7bn).
The bank said the sale of RBS Aviation Capital to Sumitomo Mitsui Banking Corporation would strengthen its Tier 1 capital position and the proceeds would be used to reduce wholesale funding requirements and fund ongoing lending.
The business currently owns 206 aircraft and has commitments to purchase a further 87 by 2015.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It is the world's fourth largest aircraft lessor by owned and managed fleet value.
It generated a profit of $89m (£58m) in the six months to the end of June 2011.
Future order commitments of $3.7bn, (£2.4bn) will transfer with the business, said RBS, which is 85% owned by the British taxpayer.
The risk weighted assets associated with the Aviation Capital business are $2.5bn, (£1.6bn).
The business is currently headquartered in Dublin and employs 69 specialists based in Dublin and eight other locations in Europe, US and Asia.
RBS group finance director, Bruce Van Saun, said, the transaction offered further evidence of the bank's progress in reducing its 'non-core portfolio'.
It is expected that the sale will complete before the end of Q3 2012.
RBS Aviation Capital was designated part of 'non-core' in February 2009 following the group's Strategic Review, which called for de-leveraging to strengthen the group's balance sheet, along with increased business focus.
-
Frozen thresholds could push ‘tax freedom day’ to latest date this centuryTax freedom day is the point in the year you stop earning for the taxman and start earning for yourself. A rising tax burden could push it to 12 June this year – the latest date since 1982.
-
Family left with £20k IHT bill because of out-of-date tax adviceFrozen tax thresholds and dated guidance helped drag the estate into an inheritance tax liability despite extensive use of gifting to avoid a bill
