RBS sells aviation arm for £5bn

TAXPAYER-FUNDED Royal Bank of Scotland saw its shares climb 5% yesterday after announcing its biggest ever single disposal — the sale of its aircraft leasing business for nearly £5 billion.

The market value of RBS, which is 83% stateowned, climbed around £800 million to £15.2 billion after it agreed to sell Dublin-based RBS Aviation Capital to Japanese bank Sumitomo Mitsui for 7.3 billion US dollars (£4.7 billion).

Broker Shore Capital upgraded its stance on RBS shares, from sell to hold, as it backed the bank’s restructuring plans, unveiled last week, as “another step in the right direction”.

While its share price is still 40% lower than it was a year ago, and at 25.4p nearly half the 50p price tag paid by the Government for its stake, any gains will be welcomed by the Treasury and the taxpayer.

Shares are up 16% since RBS revealed its plans for its investment arm Global Banking and Markets, which will include 3,500 job cuts and the closure or sale of several businesses, including broker Hoare Govett.

RBS Aviation Capital was established in 2001 after RBS acquired Internationalaviation Management Group and is the world’s fourth largest aircraft leasing company.

The profit-making business employs 69 specialists based in Dublin and has eight other locations in Europe, US and Asia.

RBS Aviation Capital has gross assets of 7.2 billion US dollars, (£4.6 billion), and generated a profit of 89 million US dollars (£58 million) in the six-month period ended June 30 last year.

RBS said it would use the proceeds of its sale to strengthen its capital position, as required by regulators, to protect itself from the impact of any future financial crises.