Business

Thursday September 10, 2009

RBS mulls sale of aviation leasing arm


LONDON: Royal Bank of Scotland (RBS) has appointed Goldman Sachs to consider a sale or other options for RBS Aviation Capital, one of the world’s biggest plane leasing businesses, people familiar with the matter said.

The process was at an early stage, the people said on Tuesday. Further details were not available. The book value of the aviation assets was about US$8bil, the Wall Street Journal said. RBS and Goldman declined to comment.

RBS Aviation is one of the top five commercial airline lessors, with total lending and owned assets of US$12bil.

It owns, manages or has orders for 372 aircraft and serves 100 airline customers in 38 countries, according to its website. It recently cancelled an order for about 25 Boeing 787 Dreamliners, according to US industry sources.

The business, which was beefed up in April 2001 with the purchase of IAMG, has a team of 90 people and have locations in in Dublin, London, New York, Hong Kong, Shanghai, Toulouse, Dubai and Singapore.

The British government owns 70% of RBS after pumping in £20bil of rescue funds. RBS Chief Executive Stephen Hester is seeking to shrink the balance sheet and has said he would shed non-core assets.

RBS sold its train leasing business Angel Trains in June 2008 for US$7bil after its finances came under strain.

Analysts estimated the sale boosted capital by between £250mil and £300mil.

AIG, the US insurer that has also been bailed out with taxpayer funds, is in the process of selling aircraft leasing rival International Lease Finance Corp (ILFC).

ILFC, one of the biggest customers of Boeing and Airbus, has been on the block since late last year but a sale has proven a challenge, due to its mountain of debt and funding needs in the midst of a financial crisis.

ILFC had a book value of about US$8bil at the end of June, but it drew bids that valued it at less than half that amount.

AIG and ILFC head Steven UdvarHazy are weighing several options for the business, including breaking up the company or carving out a new, independent company, sources familiar with the matter said last month. — Reuters


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