Talks ongoing with staff in Singapore as StanChart exits aviation business
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Standard Chartered Bank shares closed up 0.6 per cent at HK$70.95 on the Hong Kong stock exchange on Tuesday.
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SINGAPORE – Standard Chartered Bank is holding discussions with affected employees in Singapore after it sold its global aviation finance business to Aircraft Leasing Company (AviLease) for US$3.6 billion (S$4.9 billion).
The sale includes operational assets worth US$700 million and loans totalling US$2.9 billion to AviLease, a Saudi-backed aircraft lessor.
“Discussions are ongoing and it’s too early to comment further,” a spokesman for the bank told The Straits Times, when asked how the staff in the Singapore unit would be affected.
Separately, US private equity Apollo Global Management has agreed to buy most of the US$920 million portfolio of secured aviation loans from StanChart. Affiliates of Apollo will buy the rest of the aviation loans.
AviLease was founded on June 30, 2022, and is owned by the Public Investment Fund, Saudi Arabia’s sovereign wealth fund. It is expanding rapidly in its attempt to become one of the world’s top 10 aircraft-leasing companies.
The company’s chairman Fahad Al-Saif said “the acquisition will propel AviLease and will in turn support Saudi Arabia’s aviation ecosystem”.
StanChart’s aviation financing business was ranked as the 21st biggest lessor based on the US$3.7 billion market value of its fleet in publisher Airfinance Journal’s 2022 rankings. The business has more than 120 aircraft on lease to more than 30 airlines.
AviLease will pay an initial US$700 million in cash for the deal, which is expected to be concluded by the end of the year.
It will fund the repayment of the remaining US$2.9 billion of net intra-group financing from the StanChart group.
When the sale is completed, StanChart will record an estimated gain of about US$300 million.
The sale will also boost the bank’s common equity tier 1 capital ratio – a measure of a bank’s financial strength – by around 19 basis points.
It has been more than seven months since StanChart announced plans to sell its aviation finance business.
In 2022, the aviation finance business unit recorded a net profit of US$15.6 million, compared with US$44.9 million in 2021. It represents around 2 per cent of the group’s total income.
Mr Simon Cooper, StanChart’s chief executive of corporate, commercial and institutional banking and Europe and Americas, said: “The sale of our aviation finance leasing business allows us to continue focusing our efforts on those areas where we are most differentiated.”
StanChart shares closed up 0.6 per cent at HK$70.95 on the Hong Kong stock exchange on Tuesday.
