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.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
