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April 27, 2010updated 04 Apr 2017 3:54pm

BofA and Coutts expand luxury finance plans

Bank of America (BofA) and RBS Coutts have recently launched businesses dedicated to financing assets for ultra high net worth individuals (UHNW), indicating a shift back into the exotic finance market. Bank of America is currently focusing efforts on its jet finance arm, particularly in jurisdictions where its presence has been fairly limited, including Europe, the Middle East, Africa and Asia-Pacific.

By Brendan Malkin

Bank of America (BofA) and RBS Coutts have recently launched businesses dedicated to financing assets for ultra high net worth individuals (UHNW), indicating a shift back into the exotic finance market.

Bank of America is currently focusing efforts on its jet finance arm, particularly in jurisdictions where its presence has been fairly limited, including Europe, the Middle East, Africa and Asia-Pacific.

In recent months, BofA signed a strategic funding alliance with Avjet Corporation. Although based in California, Avjet also has offices in Dublin and Nice.

 

BofA builds jet finance

Alex Badran, a seasoned corporate jet financier, is spearheading this growth at BofA. Badran, who has 30 years’ experience in the sector, previously worked for Lombard, a leasing subsidiary of RBS, Barclays and most recently at Cessna Finance.

A key part of his role, it is understood, will be to provide UHNW clients of Merrill Lynch with access to jet finance.

Another challenge is building-up the business from a relatively small base. Until now non-US jet finance business has been run out of the bank’s Frankfurt office by Toennies von Limburg. The scale of this smaller operation contrasts with BofA’s large US operation which makes up the bulk of the bank’s $7bn jet finance portfolio.

Badran will also have to keep up with BofA’s well-known pace of expansion. The jet finance business has been growing rapidly ever since 2004, when the aviation finance unit of BofA’s private banking arm merged with the bank’s Leasing Corporate Aircraft Finance strategic business unit to form its new Corporate Aircraft Finance Division.

In 2004, according to public records, BofA’s jet finance arm had $4bn of assets on its books – compared to $7bn today – and also 100 fewer clients than it has today.

 

RBS expands luxury business

RBS Coutts is another committed to increasing its jet finance business.

Lombard, the asset finance subsidiary of RBS, also wants to increase its jet finance offering to the private banking clients of its parent and was recently given a mandate to do this.

“The mandate allows Lombard to work with RBS Wealth Management and Global Banking & Markets businesses in certain jurisdictions where these customers are based,” the bank said in a statement to Leasing Life, one of Private Banker International’s  sister titles.

This move means its jet finance division is now chasing deals worth up to £40m ($62m) each. Previously its market ranged from very light jets to aircraft worth about £20m.

Citi Private Bank is one of the best-known wealth managers to offer jet finance, with a specialist unit based in New York.

SG Private Banking also has access to jet finance through its equipment finance division.

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