Japan banks in aircraft financing, leasing
Cash-rich Japanese banks are rushing into aircraft finance in the hope of getting fatter profit margins than straight corporate loans.
Banks including Sumitomo Mitsui Financial Group Inc (SMFG) and Mitsubishi UFJ Financial Group Inc are also venturing into aircraft leasing as more airlines opt out of owning fleets in favour of leaner balance sheets.
We see opportunities to earn spreads we cannot ever charge on corporate loans, said Takeshi Sasaki, senior manager of structured finance at Sumitomo Mitsui Trust Bank Ltd, which set up an aircraft financing team last month.
Japanese banks are playing a bigger role in global finance - from trade credit to syndicated loans - as they diversify from a lacklustre home market. Japan's lenders, as entrants to aircraft financing, also stand a good chance of making their mark with their European rivals in retreat, Sasaki said.
Banks are also drawn to aircraft financing because it is perceived to be safer than general corporate loans. In the event of a default, lenders recover a bigger share of the loans by selling the jet.
Aircraft are gaining popularity as hard assets, said Masao Masuda, director of state-run Development Bank of Japan's global aviation team.
It is relatively easy to forecast future asset value. Also, unlike real estate, aircraft can be moved around, from weak markets to the strong.
DBJ told Reuters recently its global aircraft financing business was likely to more than double from an initially forecast 120 billion yen ($1.5 billion) in the three years through 2013.
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