RBS aiming to raise £4bn with sale of its aircraft leasing arm

ROYAL Bank of Scotland yesterday signalled the biggest disposal of assets since it was bailed out by the taxpayer by putting its aircraft leasing business up for sale.

The bank is reported to have hired Goldman Sachs to oversee the transaction, which it hopes will raise more than 4 billion.

RBS Aviation Capital, which is headquartered in Dublin, is one of the world's largest leasing companies and controls a fleet of around 260 planes.

Analysts have valued the business at between $6.8bn (4.2bn) and $8bn.

An RBS spokesman said: "The sale process for RBS Aviation Capital is under way following significant expressions of interest from potential bidders in the business in recent months.

"RBS Aviation Capital's management team has delivered strong business and financial performance over the past decade and it remains among the top four commercial aircraft lessors by fleet value, with one of the youngest fleets of narrow-bodied aircraft globally."

The spokesman said the bank would not be commenting further during the sales process.

Rival leasing companies are expected to be among the bidders.

Earlier this month, Guernsey-based financier Guy Hands said he was considering making an offer for the business.

Hands said he was "tempted" to buy the division and merge it with Irish rival Awas, which he already owns through his Terra Firma investment fund.

RBS Aviation Capital was created through the acquisition of a small advisory firm in 2001. It has increased its fleet as demand for leased aircraft increased, especially from budget airlines looking to keep down capital costs. It has concentrated on narrow-bodied, fuel efficient planes favoured by low-cost carriers.

RBS first put its aircraft leasing unit up for sale in 2009, following the state bail-out that left it 83 per cent owned by the taxpayer, with Goldman Sachs also running that sale.

However, a planned auction was cancelled as the recession hit the aviation industry and dampened buyers' appetite for the business, but the market has since recovered and is now thought to be growing strongly.

A year ago the division confirmed it had placed a 5bn order for 95 passenger aircraft. Some of the planes have already been delivered, while others are due between now and 2015.

At the time, RBS Aviation Capital chief executive Peter Barrett said the purchase of 52 Airbus A320s and 43 Boeing 737s reflected strong demand for leased aircraft, particularly in emerging markets in Asia, Latin America and the Middle East.

Leased aircraft make up about 35 per cent of the world's aircraft fleet, but that percentage is rising as airlines increasingly look to reduce their capital costs.

No timescale is thought to have been set for the sale, and RBS could postpone it again if it is not satisfied with the offers it receives.