Standard Chartered Puts Aviation Finance Arm On The Block

Tom Burroughes Group Editor 13 January 2023

Standard Chartered Puts Aviation Finance Arm On The Block

The banking group is considering options for a business that it said accounts for about one per cent of its risk-weighted assets.

UK-listed Standard Chartered said it intends to review alternative options for its aviation finance business, including a possible sale. The move is part of efforts to boost returns on equity and margins, as set out a year ago.

The aviation business is an aircraft leasing and financing operation. It manages a modern fleet of aircraft and serves airline and financial institution clients across North America, Europe, Asia, Africa and the Middle East. The aviation finance business represents around 2 per cent of total group income and around 1 per cent of Standard Chartered’s risk-weighted assets.

“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, chief executive of corporate, commercial and institutional banking Europe & Americas at Standard Chartered, said. 

“Our aviation finance business is an established global franchise with a differentiated track record of originating and servicing aircraft leasing and lending transactions, high-quality aircraft and loan portfolios, world-class airline relationships and a proven and respected management team," he added.

The bank, which earns the bulk of its revenues in regions such as Asia, wants to improve its margins and remove some balance sheet risks. Last February, when reporting full-year 2021 results, it said it wanted to accelerate plans to obtain a 10 per cent return on tangible equity by 2024. It is aiming at a 1.6 per cent improvement in corporate, commercial and institutional banking income on risk-weighted assets, enabled by a $22 billion cut in such risk-weighted assets. It wants to cut costs, including a $500 million business expense reduction programme, and is investing $300 million into China-related businesses to capture that country’s expansion.

JP Morgan Securities is advising the bank about a potential aviation finance business deal.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes