“Reaching agreement on a deal of this scale in such a volatile market is a significant success for our non-core division,” group finance director, Bruce Van Saun said in an e-mailed statement from RBS.
The transaction is “further evidence of our progress in reducing our non-core portfolio and returning the group to a position of strength”, he said.
Sumitomo Mitsui fended off competing offers from China Development Bank Corp and Wells Fargo & Co.
Sumitomo Mitsui became the leading bidder after concern grew that state-owned China Development Bank would struggle to gain government approval for a purchase in a timely manner, a source said on Thursday.
The Edinburgh-based lender was seeking to sell the unit for between $6bn and $8bn, another person said yesterday.
RBS, which received the biggest bank bailout in the world, is reversing a decade of expansion by selling assets, closing units and cutting more than 34,500 jobs.
The disposal is RBS’s biggest since it received the £45.5bn (€55bn) government rescue. Chief executive Stephen Hester has sold or wound down more than £160bn of assets since taking over from Fred Goodwin.
The bank plans to sell or close its cash equities, mergers advisory, corporate broking and equity capital markets operations at a cost of about 3,500 jobs.
The proceeds from the deal will further strengthen the Core Tier 1 capital position of RBS and will be used to reduce wholesale funding requirements and fund ongoing lending, the bank said yesterday.
The disposal is expected to reduce non-core division’s third party assets by $7bn on completion, it said.
Future order commitments of $3.7bn will transfer with the business. Risk-weighted assets associated with the Aviation Capital business are $2.5bn.
It is expected the sale will be completed before the end of the third quarter, conditional upon receipt of antitrust and regulatory approvals, RBS said.
Sumitomo Mitsui plans to buy “several hundred billion yen” of assets being sold by European lenders, president Koichi Miyata said in December. He said the Tokyo-based bank has received 7 trillion yen (€72bn) in offers from European banks including infrastructure project loans.