StanChart eyes sale of US$3.7 billion aircraft leasing unit

StanChart has said the aircraft leasing business represented around 2% of its group income

Standard Chartered is considering a sale, among several options, of its aviation unit, which according to an industry publication owns a fleet worth around US$3.7 billion.

The UK-headquartered bank said on Wednesday the aircraft leasing business represented around 2% of its group income. The unit, based in Ireland, owns and manages more than 120 planes on lease to 30 airlines, according to its website.

“We believe that a new owner can drive the next phase of growth whilst we continue to focus on our commitment to improve shareholder returns and delivering on our 2024 targets,” Simon Cooper, CEO of StanChart’s corporate, commercial and institutional banking business, said in a statement.

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 news of the deal comes at a time of heightened interest in StanChart’s strategy and future, after United Arab Emirate-based First Abu Dhabi Bank (FAB) said on Jan. 5 it had considered, but ultimately abandoned, a takeover bid.

The news sent StanChart shares up as much as 20% on the day and revived takeover speculation for the bank, which for decades has been seen as ripe for consolidation thanks to its low valuation and access to fast-growing markets in Asia.

The regulatory and practical complexities of taking over the sprawling bank could stymie any deal, analysts and investors said at the time of the FAB statement.

The global aircraft leasing business is facing challenges from inflation and rising borrowing costs even as aviation demand rebounds.

The sector has gone through major consolidation in recent years, with private equity firms also jumping in to buy smaller lessors and large players bulking up.

StanChart is working with J.P. Morgan Securities plc as its financial adviser on the potential transaction.

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