Sumitomo Group Gets $5.1 Billion Loans for RBS Aviation Purchase

Three Sumitomo group companies agreed to borrow $5.06 billion for their $7.3 billion purchase of Royal Bank of Scotland Group Plc (RBS)’s aviation division.

State-run Japan Bank for International Cooperation will offer $3 billion in loans to RBS Aerospace Ltd., whose name will be changed this month to SMBC Aviation Capital Ltd., the lender said in a statement on its website. Sumitomo Mitsui Banking Corp. will offer the remaining $2.06 billion for part of the acquisition, which was completed last week, JBIC said.

The takeover was part of Sumitomo Mitsui Financial Group Inc. (8316)’s efforts to increase overseas assets to counter slowing credit demand at home. For the loan, JBIC tapped a fund of more than $100 billion aimed at helping Japanese companies take advantage of the yen’s appreciation to step up buyouts abroad.

Sumitomo Mitsui Finance & Leasing Co. owns a 30 percent stake in SMBC Aviation Capital, Sumitomo Mitsui Financial’s banking unit holds 30 percent, and the remainder is held by Sumitomo Corp. (8053), a trading company, the bank said this week. SMBC Aviation wants to increase its share of the aircraft leasing market in Asia, where the number of passengers is set to grow, SMBC said.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net.

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net.

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