Japan's MUFG to buy German DZ Bank's aviation finance arm

Japan's MUFG to buy German DZ Bank's aviation finance arm
FILE PHOTO: A man walks past a signboard of Mitsubishi UFJ Financial Group and MUFG Bank at its headquarters in Tokyo, Japan April 3, 2018. REUTERS/Toru Hanai/File Photo -
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FRANKFURT/TOKYO (Reuters) - Japan's Mitsubishi UFJ Financial Group has agreed to buy the aviation financing business of Germany's No. 2 lender DZ Bank, the lenders said on Friday.

MUFG Bank and BOT Lease - both units of Mitsubishi UFJ Financial - have agreed to take on the entire aviation finance portfolio of DZ Bank unit DVB, which stood at 5.6 billion euros (4.8 billion pounds) in June 2018.

Reuters reported in November that MUFG had emerged as the leading suitor for DVB's aviation business.

DZ Bank had put individual tranches of its troubled transport financing division DVB up for sale after failing to find a buyer for the business as a whole.

In December, it sold a 1.4 billion euro portfolio in loans to the land transport sector to public sector lender Helaba.

DVB is unusual in banking because it straddles both aviation and shipping, and both lending and leasing - a combination rarely found in one package.

DZ Bank will now evaluate options for its shipping finance loans. DVB has 7 billion euros' worth of performing ship loans, while its 4 billion internal bad bank consists mainly of sour ship loans, both of which DZ Bank is looking to shed.

DZ Bank ditched efforts last year to sell the whole of DVB Bank partly due to low offers and its pressured shipping business.

After a decade long slump caused in part by too many vessel orders, segments of the shipping industry are seeing a fragile recovery, but that could be hit by a looming trade war between the United States and China as well as higher fuel prices.

(Reporting by Arno Schuetze and Taro Fuse; Editing by Susan Fenton)

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